S. 2046

119 S2046 IS: No China in Index Funds Act
 U.S. Senate
 2025-06-12
 text/xml
 EN
 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
  II
  119th CONGRESS
  1st Session
  S. 2046
  IN THE SENATE OF THE UNITED STATES
  June 12, 2025
  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.
Short title
This Act may be cited as the   No China in Index Funds Act  .
2.
Definitions
In this Act:
(1)
Amount of the transaction
The term  amount of the transaction  means—
(A)
with respect to a purchase that violates this Act, the purchase price; and
(B)
with respect to the holding of an investment that violates this Act, the fair market value of the investment at the time of the violation.
(2)
Chinese company
The term  Chinese company  means a company—
(A)
incorporated or otherwise organized in the People's Republic of China;
(B)
that has a majority of its assets or employees located in the People's Republic of 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 value of the company depends on the revenues, profits, market capitalization, assets, or the value of a security (including options to purchase or sell) of a company described in 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 in section 230.405 of title 17, Code of Federal Regulations, of the company, as determined by the Securities and Exchange Commission.
(3)
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) ).
(4)
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.
(5)
Investment company
The term  investment company  has the meaning given the term in section 3 of the Investment Company Act of 1940 ( 15 U.S.C. 80a–3 ).
3.
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
Any person who violates this section shall be subject to a civil penalty in an amount not to exceed the greater of—
(1)
$250,000; or
(2)
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.
(d)
Rulemaking
The Securities and Exchange Commission may issue such rules as may be necessary to carry out this section.