The Securities and Exchange Commission is deploying a massive government database—the Consolidated Audit Trail, or CAT—that monitors in real time the identity, transactions and investment portfolio of everyone who invests in the stock market. As SEC Commissioner Hester Peirce describes it, by allowing the commission to “watch investors’ every move in real time,” CAT will make it easier to investigate insider trading or market manipulation.
But as a lawsuit being filed Tuesday in Texas federal court makes clear, CAT crosses a constitutional red line. Accepting this sweeping surveillance would eviscerate fundamental privacy protections. That a few bad apples might engage in misconduct doesn’t justify mass surveillance of everyone’s private affairs.