II 

118TH CONGRESS 

2D SESSION S. 5237 

To prohibit index funds from investing in Chinese companies, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 25, 2024 

Mr. RICKETTS introduced the following bill; which was read twice and referred 

to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

To prohibit index funds from investing in Chinese companies, 

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 ‘‘No China in Index 

5 Funds Act’’. 

6 SEC. 2. DEFINITIONS. 

7 In this Act: 

8 (1) AMOUNT OF THE TRANSACTION.—The term 

9 ‘‘amount of the transaction’’ means— 


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1 (A) with respect to a purchase that violates 

2 this Act, the purchase price; and 

3 (B) with respect to the holding of an in4 vestment that violates this Act, the fair market 

5 value of the investment at the time of the viola6 tion. 

7 (2) CHINESE COMPANY.—The term ‘‘Chinese 

8 company’’ means a company— 

9 (A) incorporated or otherwise organized in 

10 the People’s Republic of China; 

11 (B) that has a majority of its assets or em12 ployees located in the People’s Republic of 

13 China; 

14 (C) owned by, controlled by, or subject to 

15 the jurisdiction or direction of the government 

16 of the People’s Republic of China; 

17 (D) where a majority of the value of the 

18 company depends on the revenues, profits, mar19 ket capitalization, assets, or the value of a secu20 rity (including options to purchase or sell) of a 

21 company described in subparagraph (A), (B), or 

22 (C), as determined by the Securities and Ex23 change Commission; or 

24 (E) where a company described under sub25 paragraph (A), (B), or (C) has control, as deVerDate Sep 11 2014 02:03 Oct 11, 2024 Jkt 059200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S5237.IS S5237

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1 fined in section 230.405 of title 17, Code of 

2 Federal Regulations, of the company, as deter3 mined by the Securities and Exchange Commis4 sion. 

5 (3) HEDGE FUND.—The term ‘‘hedge fund’’ 

6 means an issuer that would be an investment com7 pany but for paragraph (1) or (7) of section 3(c) of 

8 the Investment Company Act of 1940 (15 U.S.C. 

9 80a–3(c)). 

10 (4) INDEX FUND.—The term ‘‘index fund’’ 

11 means an investment company or hedge fund that is 

12 designed to track an index of securities or a portion 

13 of such an index. 

14 (5) INVESTMENT COMPANY.—The term ‘‘invest15 ment company’’ has the meaning given the term in 

16 section 3 of the Investment Company Act of 1940 

17 (15 U.S.C. 80a–3). 

18 SEC. 3. PROHIBITION. 

19 (a) IN GENERAL.—An index fund may not invest in 

20 a Chinese company. 

21 (b) DIVESTMENT PERIOD SAFE HARBOR.—With re22 spect to an index fund with an investment in a Chinese 

23 company on the date of enactment of this Act, subsection 

24 (a) shall not apply to such investment during the 180- 

25 day period beginning on the date of enactment of this Act. 


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1 (c) CIVIL PENALTY.—Any person who violates this 

2 section shall be subject to a civil penalty in an amount 

3 not to exceed the greater of— 

4 (1) $250,000; or 

5 (2) an amount that is twice the amount of the 

6 transaction that is the basis of the violation with re7 spect to which the penalty is imposed. 

8 (d) RULEMAKING.—The Securities and Exchange 

9 Commission may issue such rules as may be necessary to 

10 carry out this section. 

Æ 


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