Did you ever have a home renovation project that just turned into a nightmare?  

Maybe you started your project by looking for a designer.  You probably met with a few and got some estimates. After reviewing the initial plans, you probably hired a designer and then it took a few more months before you received the plans.

Once the plans were secured, you probably sought out a general contractor who could do the job. These guys are often busy and if the job is too small, they might not even be interested.  Maybe you ended up with three bids for the job.  Maybe you liked the contractor who was the most expensive but he ended up dropping out because he decided he didn’t want your job.  You decide to go with the cheapest bid and put down a deposit.  And then the problems begin.  

The contractor is late with each step of your job. He has gutted your kitchen but you haven’t seen him for weeks and he’s not returning your calls.  He finally shows up, does some more work, but now has to wait for permits. To get the permits, a design change is required and the designer now takes months to redo the plans. The contractor then decides to sub-contract some of the work to another contractor and that part of the job gets all messed up.  The contractor and sub-contractor both blame each other but you are still left with open walls and electrical wires hanging from the ceiling.

Finally, you give up and fire your contractor.  You lose your deposit but you don’t care because you just want to get rid of him and find somebody who can do the job right.  Thankfully, you call the contractor who originally decided he didn’t want your job and this time he decides to take the job.  

The job finally starts up again and is beginning to take shape but you have wasted a lot of time and money because of the bad contractor and poor design team. You hope the new contractor can finally get the job done.

The story above is actually the story of the Consolidated Audit Trail (CAT) and here are the real characters:

The Homeowner = The SEC

The Designer = The SRO’s

The  Contractor = Thesys CAT

The New Contractor = FINRA

After years of waiting, the SEC has finally had enough stalling by the SROs and has decided to hold them accountable.  Earlier this week, they announced new transparency and accountability amendments:

“The proposed amendments to the CAT NMS Plan would require self-regulatory organizations that are participants to the CAT NMS Plan to file with the Commission and publish a complete implementation plan for the Consolidated Audit Trail (“CAT”) and quarterly progress reports, each of which must be approved by the Operating Committee established by the CAT NMS Plan and submitted to the CEO, President, or equivalently situated senior officer at each Participant.  In addition, the proposed amendments would include financial accountability provisions that est​​ablish target deadlines for four implementation milestones and reduce the amount of fee recovery available to the Participants if those target deadlines are missed.”

While this is great news and we’re happy that the SEC is finally holding the SROs feet to the fire, we still wouldn’t be surprised if the CAT missed the SEC deadlines.  Think about it.  If the SROs really fear the CAT like we think they do, then they would gladly pay a small fine to delay the project even further instead of potentially paying a much larger fine.

Something tells us we are going to have bare walls and wires hanging from the ceiling for many more years.

**If you are interested in reading an excellent timeline of the disastrous CAT project, we recommend this Waters article titled “CATs Tale: How Thesys, the SROs and the SEC Mishandled the Consolidated Audit Trail” .