[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 570 Introduced in Senate (IS)]
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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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``American Financial Markets Integrity
and Security Act''.
SEC. 2. PROHIBITIONS RELATING TO CERTAIN COMMUNIST CHINESE MILITARY
COMPANIES.
(a) Definitions.--In this section:
(1) Commission.--The term ``Commission'' means the
Securities and Exchange Commission.
(2) Control; insurance company.--The terms ``control'' and
``insurance company'' have the meanings given the terms in
section 2(a) of the Investment Company Act of 1940 (15 U.S.C.
80a-2(a)).
(3) Covered entity.--
(A) In general.--The term ``covered entity''--
(i) means an entity on--
(I) the list of Communist Chinese
military companies required by section
1237(b) of the Strom Thurmond National
Defense Authorization Act for Fiscal
Year 1999 (Public Law 105-261; 50
U.S.C. 1701 note); or
(II) the entity list maintained by
the Bureau of Industry and Security of
the Department of Commerce and set
forth in Supplement No. 4 to part 744
of the title 15, Code of Federal
Regulations; and
(ii) includes a parent, subsidiary, or
affiliate of, or an entity controlled by, an
entity described in clause (i).
(B) Grace period.--For the purposes of this Act,
and the amendments made by this Act, an entity shall be
considered to be a covered entity beginning on the date
that is 1 year after the date on which the entity first
qualifies under the applicable provision of
subparagraph (A).
(4) Exchange; security.--The terms ``exchange'' and
``security'' have the meanings given those terms in section
3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
(b) Prohibitions.--
(1) Listing on exchange.--Beginning on the date that is 1
year after the date of enactment of this Act, the Commission
shall prohibit a covered entity from offering to sell or
selling on an exchange (or through any other method that is
within the jurisdiction of the Commission to regulate,
including through the method of trading that is commonly
referred to as the ``over-the-counter'' trading of securities)
securities issued by the covered entity, including pursuant to
an exemption to section 5 of the Securities Act of 1933 (15
U.S.C. 77e).
(2) Investments; limitation on actions.--
(A) In general.--The Investment Company Act of 1940
(15 U.S.C. 80a-1 et seq.) is amended--
(i) in section 12(d) (15 U.S.C. 80a-12(d)),
by adding at the end the following:
``(4)(A) It shall be unlawful for any investment company,
or any person that would be an investment company but for the
application of paragraph (1) or (7) of section 3(c), to invest
in a covered entity.
``(B) In this paragraph, the term `covered entity' has the
meaning given the term in section 2(a) of the American
Financial Markets Integrity and Security Act.''; and
(ii) in section 13(c)(1) (15 U.S.C. 80a-
13(c)(1))--
(I) in subparagraph (A), by
striking ``or'' at the end;
(II) in subparagraph (B), by
striking the period at the end and
inserting ``or''; and
(III) by adding at the end the
following:
``(C) are covered entities, as that term is defined
in section 12(d)(4)(B).''.
(B) Effective date.--The amendments made by
subparagraph (A) shall take effect on the date that is
1 year after the date of enactment of this Act.
(3) Federal funds.--
(A) In general.--Except as provided in subparagraph
(B), on and after the date that is 180 days after the
date of enactment of this Act, no Federal funds may be
used to enter into, extend, or renew a contract or
purchasing agreement with a covered entity.
(B) Waiver.--The head of a Federal agency may issue
a national security waiver to the prohibition in
subparagraph (A) for a period of not more than 2 years
with respect to a covered entity if the agency head
submits to Congress a notification that includes--
(i) a written justification for the waiver;
and
(ii) a plan for a phase-out of the goods or
services provided by the covered entity.
(4) Investments by insurance companies.--
(A) In general.--On and after the date of enactment
of this Act, an insurance company may not invest in a
covered entity.
(B) Certification of compliance.--
(i) In general.--Each insurance company
shall, on an annual basis, submit to the
Secretary of the Treasury a certification of
compliance with subparagraph (A).
(ii) Responsibilities of the secretary.--
The Secretary of the Treasury shall create a
form for the submission required under clause
(i) in such a manner that minimizes the
reporting burden on an insurance company making
the submission.
(C) Sharing information.--The Secretary of the
Treasury, acting through the Federal Insurance Office,
shall share the information received under subparagraph
(B) and coordinate verification of compliance with
State insurance offices.
(c) Qualified Trusts, etc.--
(1) In general.--Subsection (a) of section 401 of the
Internal Revenue Code of 1986 is amended by inserting after
paragraph (38) the following new paragraph:
``(39) Prohibited investments.--A trust which is part of a
plan shall not be treated as a qualified trust under this
subsection unless the plan provides that no part of the plan's
assets will be invested in any covered entity (as defined in
section 12(d)(6)(B) of the Investment Company Act of 1940).''.
(2) IRAs.--Paragraph (3) of section 408(a) of such Code is
amended by striking ``contracts'' and inserting ``contracts or
in any covered entity (as defined in section 12(d)(6)(B) of the
Investment Company Act of 1940)''.
(3) Fiduciary duty.--Section 404 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1104) is amended by
adding at the end the following new subsection:
``(f) Prohibited Investments.--No fiduciary shall cause any assets
of a plan to be invested in any covered entity (as defined in section
12(d)(6)(B) of the Investment Company Act of 1940 (15 U.S.C. 80a-
12(d)(6)(B))).''.
(4) Effective date.--
(A) In general.--Except as provided in subparagraph
(B), the amendments made by this subsection shall apply
to plan years beginning after the date which is 180
days after the date of the enactment of this Act.
(B) Plan amendments.--If subparagraph (C) applies
to any retirement plan or contract amendment--
(i) such plan or contract shall not fail to
be treated as being operated in accordance with
the terms of the plan during the period
described in subparagraph (C)(ii) solely
because the plan operates in accordance with
the amendments made by this subsection, and
(ii) except as provided by the Secretary of
the Treasury (or the Secretary's delegate),
such plan or contract shall not fail to meet
the requirements of the Internal Revenue Code
of 1986 or the Employee Retirement Income
Security Act of 1974 by reason of such
amendment.
(C) Amendments to which paragraph applies.--
(i) In general.--This paragraph shall apply
to any amendment to any plan or annuity
contract which--
(I) is made pursuant to the
provisions of this section, and
(II) is made on or before the last
day of the first plan year beginning on
or after the date which is 2 years
after the date of the enactment of this
Act (4 years after such date of
enactment, in the case of a
governmental plan).
(ii) Conditions.--This paragraph shall not
apply to any amendment unless--
(I) during the period beginning on
the date which is 180 days after the
date of the enactment of this Act, and
ending on the date described in clause
(i)(II) (or, if earlier, the date the
plan or contract amendment is adopted),
the plan or contract is operated as if
such plan or contract amendment were in
effect, and
(II) such plan or contract
amendment applies retroactively for
such period.
(D) Subsequent amendments.--Rules similar to the
rules of subparagraphs (B) and (C) shall apply in the
case of any amendment to any plan or annuity contract
made pursuant to any update of the list of Communist
Chinese military companies required by section 1237(b)
of the Strom Thurmond National Defense Authorization
Act for Fiscal Year 1999 (Public Law 105-261; 50 U.S.C.
1701 note) which is made after the effective date of
the amendments made by this subsection.
SEC. 3. MODIFICATION OF REQUIREMENTS FOR LIST OF COMMUNIST CHINESE
MILITARY COMPANIES.
Section 1237(b) of the Strom Thurmond National Defense
Authorization Act for Fiscal Year 1999 (Public Law 105-261; 50 U.S.C.
1701 note) is amended--
(1) by striking paragraph (2) and inserting the following:
``(2) Revisions to the list.--
``(A) Additions.--The Secretary of Defense, the
Secretary of Commerce, or the Director of National
Intelligence may add a person to the list required by
paragraph (1) at any time.
``(B) Removals.--A person may be removed from the
list required by paragraph (1) if the Secretary of
Defense, the Secretary of Commerce, and the Director of
National Intelligence agree to remove the person from
the list.
``(C) Submission of updates to congress.--Not later
than February 1 of each year, the Secretary of Defense
shall submit a version of the list required in
paragraph (1), updated to include any additions or
removals under this paragraph, to the committees and
officers specified in paragraph (1).'';
(2) by striking paragraph (3) and inserting the following:
``(3) Consultation.--In carrying out paragraphs (1) and
(2), the Secretary of Defense, the Secretary of Commerce, and
the Director of National Intelligence shall consult with each
other, the Attorney General, and the Director of the Federal
Bureau of Investigation.''; and
(3) in paragraph (4), in the matter preceding subparagraph
(A), by striking ``making the determination required by
paragraph (1) and of carrying out paragraph (2)'' and inserting
``this section''.
SEC. 4. ANALYSIS OF FINANCIAL AMBITIONS OF THE GOVERNMENT OF THE
PEOPLE'S REPUBLIC OF CHINA.
(a) Analysis Required.--The Director of the Office of Commercial
and Economic Analysis of the Air Force shall conduct an analysis of--
(1) the strategic importance to the Government of the
People's Republic of China of inflows of United States dollars
through capital markets to the People's Republic of China;
(2) the methods by which that Government seeks to manage
such inflows;
(3) how the inclusion of the securities of Chinese entities
in stock or bond indexes affects such inflows and serves the
financial ambitions of that Government; and
(4) how the listing of the securities of Chinese entities
on exchanges in the United States assists in--
(A) meeting the strategic goals of that Government,
including defense, surveillance, and intelligence
goals; and
(B) the fusion of the civilian and military
components of that Government.
(b) Submission to Congress.--The Director of the Office of
Commercial and Economic Analysis of the Air Force shall submit to
Congress a report--
(1) setting forth the results of the analysis conducted
under subsection (a); and
(2) based on that analysis, making recommendations for best
practices to mitigate any national security and economic risks
to the United States relating to the financial ambitions of the
Government of the People's Republic of China.
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