II 

116TH CONGRESS 

2D SESSION S. 4872 

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 

OCTOBER 26 (legislative day, OCTOBER 19), 2020 

Mr. RUBIO 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: 

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

10 means the Securities and Exchange Commission. 


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1 (2) CONTROL.—The term ‘‘control’’ has the 

2 meaning given the term in section 2(a) of the Invest3 ment Company Act of 1940 (15 U.S.C. 80a–2(a)). 

4 (3) COVERED ENTITY.— 

5 (A) IN GENERAL.—The term ‘‘covered en6 tity’’— 

7 (i) means an entity on— 

8 (I) the list of Communist Chinese 

9 military companies required by section 

10 1237(b) of the Strom Thurmond Na11 tional Defense Authorization Act for 

12 Fiscal Year 1999 (Public Law 105– 

13 261; 50 U.S.C. 1701 note); or 

14 (II) the entity list maintained by 

15 the Bureau of Industry and Security 

16 of the Department of Commerce and 

17 set forth in Supplement No. 4 to part 

18 744 of the title 15, Code of Federal 

19 Regulations; and 

20 (ii) includes a parent, subsidiary, or 

21 affiliate of, or an entity controlled by, an 

22 entity described in clause (i). 

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

24 this Act, and the amendments made by this 

25 Act, an entity shall be considered to be a covVerDate Sep 11 2014 19:03 Nov 04, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4872.IS S4872

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1 ered entity beginning on the date that is 1 year 

2 after the date on which the entity first qualifies 

3 under the applicable provision of subparagraph 

4 (A). 

5 (4) EXCHANGE; SECURITY.—The terms ‘‘ex6 change’’ and ‘‘security’’ have the meanings given 

7 those terms in section 3(a) of the Securities Ex8 change Act of 1934 (15 U.S.C. 78c(a)). 

9 (5) INSURANCE COMPANY.—The term ‘‘insur10 ance company’’ has the meaning given the term in 

11 section 2(a) of the Investment Company Act of 1940 

12 (15 U.S.C. 80a–2(a)). 

13 (b) PROHIBITIONS.— 

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

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

16 this Act, the Commission shall prohibit a covered en17 tity from offering to sell or selling securities issued 

18 by the covered entity, including pursuant to an ex19 emption to section 5 of the Securities Act of 1933 

20 (15 U.S.C. 77e). 

21 (2) INVESTMENTS; LIMITATION ON ACTIONS.— 

22 (A) IN GENERAL.—The Investment Com23 pany Act of 1940 (15 U.S.C. 80a–1 et seq.) is 

24 amended— 


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

2 12(d)), by adding at the end the following: 

3 ‘‘(6)(A) It shall be unlawful for any investment 

4 company, or any person that would be an investment 

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

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

7 ‘‘(B) In this paragraph, the term ‘covered enti8 ty’ has the meaning given the term in section 2(a) 

9 of the American Financial Markets Integrity and Se10 curity Act.’’; and 

11 (ii) in section 13(c)(1)— 

12 (I) in subparagraph (A), by strik13 ing ‘‘or’’ at the end; 

14 (II) in subparagraph (B), by 

15 striking the period at the end and in16 serting ‘‘or’’; and 

17 (III) by adding at the end the 

18 following: 

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

20 defined in section 12(d)(6)(B).’’. 

21 (B) EFFECTIVE DATE.—The amendments 

22 made by subparagraph (A) shall take effect on 

23 the date that is 1 year after the date of enact24 ment of this Act. 

25 (3) FEDERAL FUNDS.— 


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

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

3 180 days after the date of enactment of this 

4 Act, no Federal funds may be used to enter 

5 into, extend, or renew a contract or purchasing 

6 agreement with a covered entity. 

7 (B) WAIVER.—The head of a Federal 

8 agency may issue a national security waiver to 

9 the prohibition in subparagraph (A) for a pe10 riod of not more than 2 years with respect to 

11 a covered entity if the agency head submits to 

12 Congress a notification that includes— 

13 (i) a written justification for the waiv14 er; and 

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

16 goods or services provided by the covered 

17 entity. 

18 (4) INVESTMENTS BY INSURANCE COMPA19 NIES.— 

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

21 of enactment of this Act, an insurance company 

22 shall not invest in a covered entity. 

23 (B) CERTIFICATION OF COMPLIANCE.— 

24 (i) IN GENERAL.—Each insurance 

25 company shall, on an annual basis, submit 


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1 to the Secretary of the Treasury a certifi2 cation of compliance with subparagraph 

3 (A). 

4 (ii) RESPONSIBILITIES OF THE SEC5 RETARY.—The Secretary of the Treasury 

6 shall create a form for the submission re7 quired under clause (i) in such a manner 

8 that minimizes the reporting burden on an 

9 insurance company making the submission. 

10 (C) SHARING INFORMATION.—The Sec11 retary of the Treasury, acting through the Fed12 eral Insurance Office, shall share the informa13 tion received under subparagraph (B) and co14 ordinate verification of compliance with State 

15 insurance offices. 

16 (c) QUALIFIED TRUSTS, ETC.— 

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

18 401 of the Internal Revenue Code of 1986 is amend19 ed by inserting after paragraph (38) the following 

20 new paragraph: 

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

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

23 qualified trust under this subsection unless the plan 

24 provides that no part of the plan’s assets will be in25 vested in any covered entity (as defined in section 


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1 12(d)(6)(B) of the Investment Company Act of 

2 1940).’’. 

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

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

5 inserting ‘‘contracts or in any covered entity (as de6 fined in section 12(d)(6)(B) of the Investment Com7 pany Act of 1940’’. 

8 (3) FIDUCIARY DUTY.—Section 404 of the Em9 ployee Retirement Income Security Act of 1974 (29 

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

11 following new subsection: 

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

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

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

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

16 (4) EFFECTIVE DATE.— 

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

18 subparagraph (B), the amendments made by 

19 this subsection shall apply to plan years begin20 ning after the date which is 180 days after the 

21 date of the enactment of this Act. 

22 (B) PLAN AMENDMENTS.—If subpara23 graph (C) applies to any retirement plan or 

24 contract amendment— 


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1 (i) such plan or contract shall not fail 

2 to be treated as being operated in accord3 ance with the terms of the plan during the 

4 period described in subparagraph (C)(ii) 

5 solely because the plan operates in accord6 ance with the amendments made by this 

7 subsection, and 

8 (ii) except as provided by the Sec9 retary of the Treasury (or the Secretary’s 

10 delegate), such plan or contract shall not 

11 fail to meet the requirements of the Inter12 nal Revenue Code of 1986 or the Employee 

13 Retirement Income Security Act of 1974 

14 by reason of such amendment. 

15 (C) AMENDMENTS TO WHICH PARAGRAPH

16 APPLIES.— 

17 (i) IN GENERAL.—This subparagraph 

18 shall apply to any amendment to any plan 

19 or annuity contract which— 

20 (I) is made pursuant to the pro21 visions of this section, and 

22 (II) is made on or before the last 

23 day of the first plan year beginning 

24 on or after the date which is 2 years 

25 after the date of the enactment of this 


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1 Act (4 years after such date of enact2 ment, in the case of a governmental 

3 plan). 

4 (ii) CONDITIONS.—This subparagraph 

5 shall not apply to any amendment unless— 

6 (I) during the period beginning 

7 on the date which is 180 days after 

8 the date of the enactment of this Act, 

9 and ending on the date described in 

10 subclause (I)(bb) (or, if earlier, the 

11 date the plan or contract amendment 

12 is adopted), the plan or contract is op13 erated as if such plan or contract 

14 amendment were in effect, and 

15 (II) such plan or contract amend16 ment applies retroactively for such pe17 riod. 

18 (D) SUBSEQUENT AMENDMENTS.—Rules 

19 similar to the rules of subparagraphs (B) and 

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

21 to any plan or annuity contract made pursuant 

22 to any update of the list of Communist Chinese 

23 military companies required by section 1237(b) 

24 of the Strom Thurmond National Defense Au25 thorization Act for Fiscal Year 1999 (Public 


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

2 made after the effective date of the amend3 ments made by this subsection. 

4 SEC. 3. MODIFICATION OF REQUIREMENTS FOR LIST OF 

5 COMMUNIST CHINESE MILITARY COMPANIES. 

6 Section 1237(b) of the Strom Thurmond National 

7 Defense Authorization Act for Fiscal Year 1999 (Public 

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

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

10 following: 

11 ‘‘(2) REVISIONS TO THE LIST.— 

12 ‘‘(A) ADDITIONS.—The Secretary of De13 fense, the Secretary of Commerce, or the Direc14 tor of National Intelligence may add a person 

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

16 time. 

17 ‘‘(B) REMOVALS.—A person may be re18 moved from the list required by paragraph (1) 

19 if the Secretary of Defense, the Secretary of 

20 Commerce, and the Director of National Intel21 ligence agree to remove the person from the 

22 list. 

23 ‘‘(C) SUBMISSION OF UPDATES TO CON24 GRESS.—Not later than February 1 of each 

25 year, the Secretary of Defense shall submit a 


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

2 updated to include any additions or removals 

3 under this paragraph, to the committees and of4 ficers specified in paragraph (1).’’; 

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

6 following: 

7 ‘‘(3) CONSULTATION.—In carrying out para8 graphs (1) and (2), the Secretary of Defense, the 

9 Secretary of Commerce, and the Director of Na10 tional Intelligence shall consult with each other, the 

11 Attorney General, and the Director of the Federal 

12 Bureau of Investigation.’’; and 

13 (3) in paragraph (4), by striking ‘‘making the 

14 determination required by paragraph (1) and of car15 rying out paragraph (2)’’ and inserting ‘‘this sec16 tion’’. 

17 SEC. 4. ANALYSIS OF FINANCIAL AMBITIONS OF THE GOV18 ERNMENT OF THE PEOPLE’S REPUBLIC OF 

19 CHINA. 

20 (a) ANALYSIS REQUIRED.—The Director of the Of21 fice of Commercial and Economic Analysis of the Air 

22 Force shall conduct an analysis of— 

23 (1) the strategic importance to the Government 

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


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1 United States dollars through capital markets to the 

2 People’s Republic of China; 

3 (2) the methods by which that Government 

4 seeks to manage such inflows; 

5 (3) how the inclusion of the securities of Chi6 nese entities in stock or bond indexes affects such 

7 inflows and serves the financial ambitions of that 

8 Government; and 

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

10 entities on exchanges in the United States assists 

11 in— 

12 (A) meeting the strategic goals of that 

13 Government, including defense, surveillance, 

14 and intelligence goals; and 

15 (B) the fusion of the civilian and military 

16 components of that Government. 

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

18 Office of Commercial and Economic Analysis of the Air 

19 Force shall submit to Congress a report— 

20 (1) setting forth the results of the analysis con21 ducted under subsection (a); and 

22 (2) based on that analysis, making rec23 ommendations for best practices to mitigate any na24 tional security and economic risks to the United 


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1 States relating to the financial ambitions of the Gov2 ernment of the People’s Republic of China. 

Æ 


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