House Republicans Press SEC to Delay CAT Funding

House Republicans urged SEC Chair Paul Atkins to delay approving a new funding model for the Consolidated Audit Trail until a comprehensive system review is complete.

In the letter, Representatives French Hill, Ann Wagner, and Barry Loudermilk commended the SEC for taking steps to limit the collection of personally identifiable information ("PII") and reduce costs. They recommended that the Commission consider codifying these efforts permanently.

The Representatives argued that it would be "prudent to defer the approval of any new funding model" until the agency finishes its review. The Representatives highlighted concerns regarding scope, cybersecurity vulnerabilities, and funding, pointed out by investors and broker-dealers. They suggested that the review should evaluate alternative actions, "including more limited surveillance approaches [or] enhancements to existing systems, ... to address regulatory objectives while mitigating privacy and security risks." They warned that moving forward prematurely could "inadvertently diminish the impact of the review" and potentially entrench existing governance and budgetary deficiencies, specifically citing a recent Eleventh Circuit ruling.

The Representatives asked the SEC to provide a timeline for the completion of the comprehensive review and periodic briefings on its progress.