Thomas A. Berry and Kimberly Coleman
In today’s digitized world, nearly everything we do can be captured, stored, and made accessible to the government. The time we wake up, the places we go, the news stories we read, the snacks we purchase for our kids, the route of our daily run, how much we weigh, and even the temperature we prefer to keep our homes are all routinely collected and stored by commercial companies. Normally, the government cannot access that information without a manual process, but the Securities and Exchange Commission’s Consolidated Audit Trail (CAT) system threatens to change all of that.
The CAT is a surveillance system that permits the SEC to track all investors and trades in the US Securities markets. In 2025, the Eleventh Circuit struck down an SEC order funding the CAT because it violated the Administrative Procedure Act, but the SEC has recently issued a similar order. That order has likewise been challenged by a trade organization representing financial services firms. And Cato has filed an amicus brief in support of the association’s request that the recent order be set aside.
Our brief argues that a national financial surveillance system like the CAT requires clear congressional authorization, and such authorization is lacking. A clear statement of congressional intent is necessary before courts will interpret a statute to confer agencies with decisions of vast economic and political significance, also known as “major questions.” The CAT is clearly significant—it can collect billions of trades daily, costs over $150 million each year, and threatens key constitutional rights. Yet the supposed authority—the vague, decades-old provisions of the Securities Exchange Act—cannot support a system of this scope. Therefore, the CAT system presents a major question that lacks the requisite congressional authorization.
Moreover, courts should be wary of state action that endangers citizens’ constitutional rights. The SEC, without a warrant and absent a showing of even reasonable suspicion, is acquiring and searching massive amounts of investors’ and brokers’ personal information and transactions stretching back years. By compelling the production of potentially incriminating records, the CAT violates the Fifth Amendment rights of investors and brokers not to be forced to testify against themselves. It also implicates the Fourth Amendment because it is a warrantless search of investors’ and brokers’ financial records.
Because Congress has not spoken clearly about the agency’s authority to create this massive surveillance system, the Eleventh Circuit should set aside the order funding the CAT.
