II 

117TH CONGRESS 

1ST SESSION S. 570 

To prohibit the trading of the securities of certain Communist Chinese 

military companies on a national securities exchange, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 3, 2021 

Mr. RUBIO (for himself, Mr. SCOTT of Florida, Mr. BRAUN, Mr. COTTON, Mr. 

KENNEDY, and Mr. SASSE) introduced the following bill; which was read 

twice and referred to the Committee on Finance 

A BILL 

To prohibit the trading of the securities of certain Communist Chinese military companies on a national securities exchange, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘American Financial 

5 Markets Integrity and Security Act’’. 

6 SEC. 2. PROHIBITIONS RELATING TO CERTAIN COMMUNIST 

7 CHINESE MILITARY COMPANIES. 

8 (a) DEFINITIONS.—In this section: 


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1 (1) COMMISSION.—The term ‘‘Commission’’ 

2 means the Securities and Exchange Commission. 

3 (2) CONTROL; INSURANCE COMPANY.—The 

4 terms ‘‘control’’ and ‘‘insurance company’’ have the 

5 meanings given the terms in section 2(a) of the In6 vestment Company Act of 1940 (15 U.S.C. 80a– 

7 2(a)). 

8 (3) COVERED ENTITY.— 

9 (A) IN GENERAL.—The term ‘‘covered en10 tity’’— 

11 (i) means an entity on— 

12 (I) the list of Communist Chinese 

13 military companies required by section 

14 1237(b) of the Strom Thurmond Na15 tional Defense Authorization Act for 

16 Fiscal Year 1999 (Public Law 105– 

17 261; 50 U.S.C. 1701 note); or 

18 (II) the entity list maintained by 

19 the Bureau of Industry and Security 

20 of the Department of Commerce and 

21 set forth in Supplement No. 4 to part 

22 744 of the title 15, Code of Federal 

23 Regulations; and 


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1 (ii) includes a parent, subsidiary, or 

2 affiliate of, or an entity controlled by, an 

3 entity described in clause (i). 

4 (B) GRACE PERIOD.—For the purposes of 

5 this Act, and the amendments made by this 

6 Act, an entity shall be considered to be a cov7 ered entity beginning on the date that is 1 year 

8 after the date on which the entity first qualifies 

9 under the applicable provision of subparagraph 

10 (A). 

11 (4) EXCHANGE; SECURITY.—The terms ‘‘ex12 change’’ and ‘‘security’’ have the meanings given 

13 those terms in section 3(a) of the Securities Ex14 change Act of 1934 (15 U.S.C. 78c(a)). 

15 (b) PROHIBITIONS.— 

16 (1) LISTING ON EXCHANGE.—Beginning on the 

17 date that is 1 year after the date of enactment of 

18 this Act, the Commission shall prohibit a covered en19 tity from offering to sell or selling on an exchange 

20 (or through any other method that is within the ju21 risdiction of the Commission to regulate, including 

22 through the method of trading that is commonly re23 ferred to as the ‘‘over-the-counter’’ trading of securi24 ties) securities issued by the covered entity, includVerDate Sep 11 2014 19:18 Apr 06, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S570.IS S570

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1 ing pursuant to an exemption to section 5 of the Se2 curities Act of 1933 (15 U.S.C. 77e). 

3 (2) INVESTMENTS; LIMITATION ON ACTIONS.— 

4 (A) IN GENERAL.—The Investment Com5 pany Act of 1940 (15 U.S.C. 80a–1 et seq.) is 

6 amended— 

7 (i) in section 12(d) (15 U.S.C. 80a– 

8 12(d)), by adding at the end the following: 

9 ‘‘(4)(A) It shall be unlawful for any investment 

10 company, or any person that would be an investment 

11 company but for the application of paragraph (1) or 

12 (7) of section 3(c), to invest in a covered entity. 

13 ‘‘(B) In this paragraph, the term ‘covered enti14 ty’ has the meaning given the term in section 2(a) 

15 of the American Financial Markets Integrity and Se16 curity Act.’’; and 

17 (ii) in section 13(c)(1) (15 U.S.C. 

18 80a–13(c)(1))— 

19 (I) in subparagraph (A), by strik20 ing ‘‘or’’ at the end; 

21 (II) in subparagraph (B), by 

22 striking the period at the end and in23 serting ‘‘or’’; and 

24 (III) by adding at the end the 

25 following: 


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1 ‘‘(C) are covered entities, as that term is 

2 defined in section 12(d)(4)(B).’’. 

3 (B) EFFECTIVE DATE.—The amendments 

4 made by subparagraph (A) shall take effect on 

5 the date that is 1 year after the date of enact6 ment of this Act. 

7 (3) FEDERAL FUNDS.— 

8 (A) IN GENERAL.—Except as provided in 

9 subparagraph (B), on and after the date that is 

10 180 days after the date of enactment of this 

11 Act, no Federal funds may be used to enter 

12 into, extend, or renew a contract or purchasing 

13 agreement with a covered entity. 

14 (B) WAIVER.—The head of a Federal 

15 agency may issue a national security waiver to 

16 the prohibition in subparagraph (A) for a pe17 riod of not more than 2 years with respect to 

18 a covered entity if the agency head submits to 

19 Congress a notification that includes— 

20 (i) a written justification for the waiv21 er; and 

22 (ii) a plan for a phase-out of the 

23 goods or services provided by the covered 

24 entity. 


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1 (4) INVESTMENTS BY INSURANCE COMPA2 NIES.— 

3 (A) IN GENERAL.—On and after the date 

4 of enactment of this Act, an insurance company 

5 may not invest in a covered entity. 

6 (B) CERTIFICATION OF COMPLIANCE.— 

7 (i) IN GENERAL.—Each insurance 

8 company shall, on an annual basis, submit 

9 to the Secretary of the Treasury a certifi10 cation of compliance with subparagraph 

11 (A). 

12 (ii) RESPONSIBILITIES OF THE SEC13 RETARY.—The Secretary of the Treasury 

14 shall create a form for the submission re15 quired under clause (i) in such a manner 

16 that minimizes the reporting burden on an 

17 insurance company making the submission. 

18 (C) SHARING INFORMATION.—The Sec19 retary of the Treasury, acting through the Fed20 eral Insurance Office, shall share the informa21 tion received under subparagraph (B) and co22 ordinate verification of compliance with State 

23 insurance offices. 

24 (c) QUALIFIED TRUSTS, ETC.— 


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1 (1) IN GENERAL.—Subsection (a) of section 

2 401 of the Internal Revenue Code of 1986 is amend3 ed by inserting after paragraph (38) the following 

4 new paragraph: 

5 ‘‘(39) PROHIBITED INVESTMENTS.—A trust 

6 which is part of a plan shall not be treated as a 

7 qualified trust under this subsection unless the plan 

8 provides that no part of the plan’s assets will be in9 vested in any covered entity (as defined in section 

10 12(d)(6)(B) of the Investment Company Act of 

11 1940).’’. 

12 (2) IRAS.—Paragraph (3) of section 408(a) of 

13 such Code is amended by striking ‘‘contracts’’ and 

14 inserting ‘‘contracts or in any covered entity (as de15 fined in section 12(d)(6)(B) of the Investment Com16 pany Act of 1940)’’. 

17 (3) FIDUCIARY DUTY.—Section 404 of the Em18 ployee Retirement Income Security Act of 1974 (29 

19 U.S.C. 1104) is amended by adding at the end the 

20 following new subsection: 

21 ‘‘(f) PROHIBITED INVESTMENTS.—No fiduciary shall 

22 cause any assets of a plan to be invested in any covered 

23 entity (as defined in section 12(d)(6)(B) of the Investment 

24 Company Act of 1940 (15 U.S.C. 80a–12(d)(6)(B))).’’. 

25 (4) EFFECTIVE DATE.— 


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1 (A) IN GENERAL.—Except as provided in 

2 subparagraph (B), the amendments made by 

3 this subsection shall apply to plan years begin4 ning after the date which is 180 days after the 

5 date of the enactment of this Act. 

6 (B) PLAN AMENDMENTS.—If subpara7 graph (C) applies to any retirement plan or 

8 contract amendment— 

9 (i) such plan or contract shall not fail 

10 to be treated as being operated in accord11 ance with the terms of the plan during the 

12 period described in subparagraph (C)(ii) 

13 solely because the plan operates in accord14 ance with the amendments made by this 

15 subsection, and 

16 (ii) except as provided by the Sec17 retary of the Treasury (or the Secretary’s 

18 delegate), such plan or contract shall not 

19 fail to meet the requirements of the Inter20 nal Revenue Code of 1986 or the Employee 

21 Retirement Income Security Act of 1974 

22 by reason of such amendment. 

23 (C) AMENDMENTS TO WHICH PARAGRAPH

24 APPLIES.— 


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1 (i) IN GENERAL.—This paragraph 

2 shall apply to any amendment to any plan 

3 or annuity contract which— 

4 (I) is made pursuant to the pro5 visions of this section, and 

6 (II) is made on or before the last 

7 day of the first plan year beginning 

8 on or after the date which is 2 years 

9 after the date of the enactment of this 

10 Act (4 years after such date of enact11 ment, in the case of a governmental 

12 plan). 

13 (ii) CONDITIONS.—This paragraph 

14 shall not apply to any amendment unless— 

15 (I) during the period beginning 

16 on the date which is 180 days after 

17 the date of the enactment of this Act, 

18 and ending on the date described in 

19 clause (i)(II) (or, if earlier, the date 

20 the plan or contract amendment is 

21 adopted), the plan or contract is oper22 ated as if such plan or contract 

23 amendment were in effect, and 


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1 (II) such plan or contract amend2 ment applies retroactively for such pe3 riod. 

4 (D) SUBSEQUENT AMENDMENTS.—Rules 

5 similar to the rules of subparagraphs (B) and 

6 (C) shall apply in the case of any amendment 

7 to any plan or annuity contract made pursuant 

8 to any update of the list of Communist Chinese 

9 military companies required by section 1237(b) 

10 of the Strom Thurmond National Defense Au11 thorization Act for Fiscal Year 1999 (Public 

12 Law 105–261; 50 U.S.C. 1701 note) which is 

13 made after the effective date of the amend14 ments made by this subsection. 

15 SEC. 3. MODIFICATION OF REQUIREMENTS FOR LIST OF 

16 COMMUNIST CHINESE MILITARY COMPANIES. 

17 Section 1237(b) of the Strom Thurmond National 

18 Defense Authorization Act for Fiscal Year 1999 (Public 

19 Law 105–261; 50 U.S.C. 1701 note) is amended— 

20 (1) by striking paragraph (2) and inserting the 

21 following: 

22 ‘‘(2) REVISIONS TO THE LIST.— 

23 ‘‘(A) ADDITIONS.—The Secretary of De24 fense, the Secretary of Commerce, or the Direc25 tor of National Intelligence may add a person 


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1 to the list required by paragraph (1) at any 

2 time. 

3 ‘‘(B) REMOVALS.—A person may be re4 moved from the list required by paragraph (1) 

5 if the Secretary of Defense, the Secretary of 

6 Commerce, and the Director of National Intel7 ligence agree to remove the person from the 

8 list. 

9 ‘‘(C) SUBMISSION OF UPDATES TO CON10 GRESS.—Not later than February 1 of each 

11 year, the Secretary of Defense shall submit a 

12 version of the list required in paragraph (1), 

13 updated to include any additions or removals 

14 under this paragraph, to the committees and of15 ficers specified in paragraph (1).’’; 

16 (2) by striking paragraph (3) and inserting the 

17 following: 

18 ‘‘(3) CONSULTATION.—In carrying out para19 graphs (1) and (2), the Secretary of Defense, the 

20 Secretary of Commerce, and the Director of Na21 tional Intelligence shall consult with each other, the 

22 Attorney General, and the Director of the Federal 

23 Bureau of Investigation.’’; and 

24 (3) in paragraph (4), in the matter preceding 

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1 mination required by paragraph (1) and of carrying 

2 out paragraph (2)’’ and inserting ‘‘this section’’. 

3 SEC. 4. ANALYSIS OF FINANCIAL AMBITIONS OF THE GOV4 ERNMENT OF THE PEOPLE’S REPUBLIC OF 

5 CHINA. 

6 (a) ANALYSIS REQUIRED.—The Director of the Of7 fice of Commercial and Economic Analysis of the Air 

8 Force shall conduct an analysis of— 

9 (1) the strategic importance to the Government 

10 of the People’s Republic of China of inflows of 

11 United States dollars through capital markets to the 

12 People’s Republic of China; 

13 (2) the methods by which that Government 

14 seeks to manage such inflows; 

15 (3) how the inclusion of the securities of Chi16 nese entities in stock or bond indexes affects such 

17 inflows and serves the financial ambitions of that 

18 Government; and 

19 (4) how the listing of the securities of Chinese 

20 entities on exchanges in the United States assists 

21 in— 

22 (A) meeting the strategic goals of that 

23 Government, including defense, surveillance, 

24 and intelligence goals; and 


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1 (B) the fusion of the civilian and military 

2 components of that Government. 

3 (b) SUBMISSION TO CONGRESS.—The Director of the 

4 Office of Commercial and Economic Analysis of the Air 

5 Force shall submit to Congress a report— 

6 (1) setting forth the results of the analysis con7 ducted under subsection (a); and 

8 (2) based on that analysis, making rec9 ommendations for best practices to mitigate any na10 tional security and economic risks to the United 

11 States relating to the financial ambitions of the Gov12 ernment of the People’s Republic of China. 

Æ 


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