SEC Market Surveillance Called Unconstitutional in New Suit (1)

The US Securities and Exchange Commission was sued by a conservative think tank and a pair of individual investors who claim the regulator’s new market surveillance tool violates their constitutional privacy rights.

Filed Tuesday in federal court in Waco, Texas, the suit led by the National Center for Public Policy Research accuses the SEC of acting without authority to create the Consolidated Audit Trail, a database intended to collect virtually all US trading data.

According to the suit, the CAT will “impose dystopian surveillance, suspicionless seizures, and real or potential searches on millions of American investors.”

The Texas suit, which ...