The lawsuit alleges that the SEC is unlawfully monitoring American stock market investors

A recent complaint claims that the Securities and Exchange Commission (SEC) is gathering personal information about every individual who trades in the stock market illegally.

The New Civil Liberties Alliance (NCLA) filed the lawsuit against the SEC on Tuesday. The NCLA claims that the agency is gathering a significant amount of personally identifiable data through its “Consolidated Audit Trail,” or “CAT,” programme by requiring brokers, exchanges, clearing agencies, and alternative trading systems to record and transmit comprehensive information on each investor’s trades in U.S. markets to a central database.

Initiated during the Obama administration with bipartisan support, the CAT programme, funded by fees collected through investment transactions, is criticised by the NCLA as illegal and endangering Americans’ financial privacy. Peggy Little, NCLA’s senior litigation counsel, argues that the programme grants the SEC unprecedented surveillance powers without congressional approval, posing perpetual risks to Americans’ savings.

The lawsuit, filed in the Western District of Texas, labels CAT as the largest government-mandated collection of personal financial data in U.S. history. It challenges the SEC’s broad surveillance practices, which collect detailed information on investors’ trades without legal authority. Little emphasises the financial burden imposed on investors to fund the programme through fees extracted by self-regulatory organisations.

Former Attorney General William Barr, in an op-ed, underscored the importance of Fourth Amendment protections against government overreach, criticising the SEC’s stance that easier investigations justify bypassing these safeguards.