No China in Index Funds Act

Bill: 118-hr-7758
Sponsor: full_name: Rep. Sherman, Brad [D-CA-32]
Introduced: 2024-03-20
Policy area: Finance and Financial Sector
Latest action: action_date: 2024-03-20
text: Referred to the House Committee on Financial Services.

Summaries:
action_date: 2024-03-20
action_desc: Introduced in House
text: <p><strong>No China in Index Funds Act</strong></p><p>This bill prohibits index funds from investing in Chinese companies. Index funds with investments in Chinese companies on the date of enactment have 180 days to divest. The bill establishes civil penalties for violations.&nbsp;</p>

tv_txt: I 118th CONGRESS 2d Session H. R. 7758 IN THE HOUSE OF REPRESENTATIVES March 20, 2024 Mr. Sherman (for himself and Mrs. Spartz ) introduced the following bill; which was referred to the Committee on Financial Services A BILL To prohibit index funds from investing in Chinese companies, and for other purposes.

1. Short title This Act may be cited as the No China in Index Funds Act . 2. Prohibition (a) In general An index fund may not invest in a Chinese company. (b) Divestment period safe harbor With respect to an index fund with an investment in a Chinese company on the date of enactment of this Act, subsection (a) shall not apply to such investment during the 180-day period beginning on the date of enactment of this Act. (c) Civil penalty (1) In general Any person who violates this section shall be subject to a civil penalty in an amount not to exceed the greater of— (A) $250,000; or (B) an amount that is twice the amount of the transaction that is the basis of the violation with respect to which the penalty is imposed. (2) Amount of a transaction defined For purposes of paragraph (1)(B), the term “amount of a transaction” means— (A) with respect to a purchase that violates this section, the purchase price; and (B) with respect to the holding of an investment that violates this section, the fair market value of the investment at the time of the violation. (d) Rulemaking The Securities and Exchange Commission may issue such rules as may be necessary to carry out this section. (e) Definitions In this section: (1) Chinese company The term Chinese company means a company— (A) incorporated or otherwise organized in China; (B) that has a majority of its assets or employees located in China; (C) owned by, controlled by, or subject to the jurisdiction or direction of the government of the People’s Republic of China; (D) where a majority of the company’s value depends on the revenues, profits, market capitalization, assets, or the value of a security (including options to purchase or sell) of a company described under subparagraph (A), (B), or (C), as determined by the Securities and Exchange Commission; or (E) where a company described under subparagraph (A), (B), or (C) has control, as defined under section 230.405 of title 17, Code of Federal Regulations, of the company, as determined by the Securities and Exchange Commission. (2) Hedge fund The term hedge fund means an issuer that would be an investment company but for paragraph (1) or (7) of section 3(c) of the Investment Company Act of 1940 ( 15 U.S.C. 80a–3(c) ). (3) Index fund The term index fund means an investment company or hedge fund that is designed to track an index of securities or a portion of such an index. (4) Investment company The term investment company has the meaning given that term under section 3 of the Investment Company Act of 1940 ( 15 U.S.C. 80a–3 ).