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S2046119th CongressWALLET

No China in Index Funds Act

Sponsored By: Senator Ricketts, Pete [R-NE]

Introduced

Summary

This bill would block index funds from investing in Chinese companies. It would give funds a 180-day safe harbor to divest existing holdings and create civil penalties and SEC rulemaking authority to enforce the ban.

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  • Index fund managers and investors would need to remove covered Chinese-company holdings within a 180-day divestment window. Violations could trigger a civil penalty up to $250,000 or twice the transaction amount.
  • Companies that meet the bill's broad definition of a "Chinese company" would be off-limits for index funds, reducing those funds' exposure to firms incorporated in or economically tied to the People's Republic of China.
  • The Securities and Exchange Commission would be able to write rules to implement the ban and to determine which firms meet the statute's tests for being a Chinese company, including control, location of assets or employees, or government ownership or direction.

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Bill Overview

Analyzed Economic Effects

1 provisions identified: 0 benefits, 0 costs, 1 mixed.

Ban index funds holding Chinese firms

This bill would stop index funds from buying or holding companies the bill calls "Chinese companies." The bill would define "Chinese company" using tests about incorporation, majority assets or employees in China, government control, or reliance on such companies, with the Securities and Exchange Commission making some determinations. Index funds that already held a covered company on the date of enactment would have a 180-day safe-harbor to sell that holding. Anyone who violates the ban could face a civil penalty up to the greater of $250,000 or twice the transaction amount. The Securities and Exchange Commission would be able to issue rules to implement the ban and the definitions.

Sponsors & CoSponsors

Sponsor

Ricketts, Pete [R-NE]

NE • R

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

No roll call votes available for this bill.

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