Forefront Communications

Pensions & Investments: SEC Commissioner Criticizes Audit Trail Project

Forefront Communications

Forefront Communications

From the STA Conference in Washington, DC—Commissioner Hester M. Peirce is “disturbed” by the amount of data that will soon be collected by the SEC’s consolidated audit trail, she said Friday at a Security Traders Association conference in Washington.

“It took me a little while for me to get to the point of seeing how really intense a project this is and how the liberty consequences of this project are really pretty severe,” Ms. Peirce said during a panel discussion. “Because, as a government regulator and as someone who’s been in the securities world for a long time, I’m used to this being a really highly regulated industry, but this is taking it one step further by saying we’re going to track everything that retail investors do.”

CAT will be a single database for all equity and options trades executed on U.S. exchanges. It’s intended to allow regulators to track illegal or manipulative trades and show a way to quickly determine what caused large, sudden losses in trading value, such as the flash crash of May 6, 2010. That event resulted in the loss of nearly $1 trillion in U.S. equity value in the Dow Jones industrial average in a little more than 30 minutes.

Starting in April, broker-dealers will be required to submit data to the CAT on trades they execute on behalf of clients — including institutional investors.

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