June 12, 2025
Mr. Ricketts introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs
To prohibit index funds from investing in Chinese companies, 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 No China in Index Funds Act
.
Sec. 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).
Sec. 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.