Congressional Republicans are ramping up efforts to restrict the Securities and Exchange Commission’s (SEC) ability to collect private investor data following a recent hack of the agency’s official social media account. The hack, which occurred on social media platform X, has raised concerns about the security of sensitive investor information. Republican Senator John Kennedy, a member of the Senate Banking Committee, plans to push for legislation that would limit the SEC’s mining of financial and personal data.
The hack of the SEC’s X account has highlighted the urgent need for the Protecting Investors’ Personally Identifiable Information Act, according to Kennedy. He emphasized that the risk to investor privacy is now clearer than ever, and it is Congress’s responsibility to take action. The FBI, the SEC’s Office of the Inspector General, the Commodity Futures Trading Commission, and the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency have launched their own investigations into the matter.
Senators Ron Wyden and Cynthia Lummis have requested an update on the investigation from the Office of the Inspector General. The SEC has stated that there is currently no evidence to suggest that the unauthorized party gained access to any other SEC systems or data. However, the incident has raised questions about the SEC’s internal cyber safety practices and the security of investor information stored in databases like the Consolidated Audit Trail (CAT).
Lawmakers are concerned about the potential for criminals or terrorists to exploit the SEC’s large databases of investor information, potentially leading to illicit profits, identity theft, and destabilization of the U.S. financial system. Republican Representative Barry Loudermilk has introduced legislation in the House to restrict the SEC’s data collection capabilities and prevent breaches.
The CAT database, which tracks equities and options trades in the U.S., has come under scrutiny from regulatory agencies and industry trade groups. Wall Street firms Citadel Securities and the American Securities Association have filed a lawsuit against the SEC, claiming that the Commission exceeded its authority and ignored investor and industry concerns in approving the CAT funding model.
Despite the controversy, the SEC believes that the CAT database is essential for improving investor protection and market integrity. Former SEC Chairman Jay Clayton and current Chairman Gary Gensler have both expressed support for the database, stating its importance in regulatory oversight and surveillance efforts.
In conclusion, the recent hack of the SEC’s social media account has prompted Republican lawmakers to prioritize legislation aimed at protecting investor privacy. The incident has raised concerns about the security of sensitive investor information and the potential for illicit activities. While the SEC defends the importance of databases like the Consolidated Audit Trail, debates continue regarding the balance between investor protection and data collection.
