SIFMA Argues CAT Should Be Liable For Data Breaches

In a new report, SIFMA continued to object to a FINRA-proposed amendment that would hold industry members liable for a system breach of the National Market System Plan Governing the Consolidated Audit Trail ("CAT"). (See previous coverage.)

SIFMA followed up on its comment letter with a report that concludes that the proposed amendment would indirectly harm investors.

In the report, SIFMA states that should the proposed amendments be adopted:

1. CAT LLC would not be properly incentivized to protect CAT data, thereby increasing the risk that investor's data would be compromised; and
2. to protect themselves against liability for a data breach over which they had no control, industry members would make "inefficient" insurance purchases for litigation-related expenses - costs that the members would likely pass to investors.