Washington, D.C., July 22, 2026 (GLOBE NEWSWIRE) -- The Securities and Exchange Commission’s “Consolidated Audit Trail” (CAT) forces brokers, exchanges, clearing agencies and alternative trading systems to capture and send detailed information on every investor’s stock and other securities trades in U.S. markets to a centralized database. SEC and private regulators can access that database forever. Never authorized by Congress, the CAT is the largest government-mandated mass collection of personal financial data in American history and an unprecedented cybersecurity risk.
The CAT violates the constitutional rights of ordinary investors, including NCLA clients Erik Davidson, John Restivo, and the National Center for Public Policy Research. Because the CAT seizes their private financial data without due process of law, it violates the Fourth and Fifth Amendments. It also forces them to tell the government their private decisions about how they invest or donate their stock, running roughshod over their First Amendment freedoms of association and expression.
Since 2024, the New Civil Liberties Alliance has led the Davidson, et al. v. Atkins lawsuit aimed at shutting the CAT down. But SEC secured two unprecedented six-month abeyances, suspending the lawsuit for the past year while the CAT continued to seize and hoard Americans’ investment data. Now, SEC asks for the U.S. District Court for the Western District of Texas to hold Davidson in abeyance for another six months. NCLA filed a response today urging the District Court to reject SEC’s request and allow the lawsuit to move forward against the CAT’s unprecedented assault on constitutional rights.
SEC’s request for abeyance defies logic. Last month, the Supreme Court affirmed in Chatrie v. United States that the Fourth Amendment forbids widespread, indiscriminate, and pervasive digital government surveillance. The CAT’s collection of digital investment data violates the Fourth Amendment to an even greater degree than police collecting cell phone location data in Chatrie. Further, there is nothing SEC could do to make its seize-first, search-later scheme constitutional. Holding NCLA’s lawsuit in abeyance would implicate the judiciary in this ever-increasing Fourth Amendment violation on a massive and cumulating scale.
Supreme Court precedent also says cases cannot be stayed beyond the “bounds of moderation.” Staying Davidson for another six months exceeds any reasonable bounds. SEC claims it is “rethinking” the CAT, wrongly arguing that this authorizes delaying the case further. In reality, the agency is not committed to eliminating the CAT and has not indicated when it might finish any work to potentially reform the program. A stay only wastes resources while delaying inevitable review of this unconstitutional and unlawful scheme as Americans continue to suffer.
NCLA released the following statements:
“The SEC’s serial delay tactics should not be countenanced by this court. Even Congress cannot authorize this panopticon that puts the investment decisions of every American in a massive government database. It is long past time for the Judicial Branch to do its duty and declare the CAT unconstitutional.”
— Peggy Little, Senior Litigation Counsel, NCLA
“The SEC's Consolidated Audit Trail is an egregious violation of Americans' privacy. NCLA sued to shut it down over two years ago, but the SEC has successfully delayed judicial review of the scheme through procedural gamesmanship. The court should not allow these delay tactics to continue.”
— Christian Clase, Constitutional Litigation Fellow, NCLA
“The main statutory and constitutional problems with SEC’s unlawful CAT database are not ones the agency can solve. So, permitting the agency to keep fiddling while Americans’ Fourth Amendment rights burn amounts to a dereliction of judicial duty.”
— Mark Chenoweth, President, NCLA
For more information visit the case page here.
ABOUT NCLA
NCLA is a nonpartisan, nonprofit civil rights group founded by prominent legal scholar Philip Hamburger to protect constitutional freedoms from violations by the Administrative State. NCLA’s public-interest litigation and other pro bono advocacy strive to tame the unlawful power of state and federal agencies and to foster a new civil liberties movement that will help restore Americans’ fundamental rights.
Joe Martyak New Civil Liberties Alliance 703-403-1111 joe.martyak@ncla.legal
