,,ii  #aahth ,,congress  #b;d ,session  
,s4 #dehi  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,june #ah1     
#bjbd,mr4 ,scott of ,florida introduced 
the following bill2 which was read twice
 and referred to the ,committee on      
,banking1 ,housing1 and ,urban ,affairs 
,a ,,bill  ,to prohibit index funds and 
registered investment companies from    
investing in ,chinese companies1 and for
 other purposes4  #a4 ,short title ,this
 ,act may be cited as the ,safeguarding 
,u4,s4 ,financial ,leadership ,against  
,communist ,china ,act4  #b4 ,findings  
,congress finds the following3 7#a7 ,a  
#bjbd report by the ,select ,committee  
on the ,chinese ,communist ,party of the
 ,house of ,representatives found that  
index providers and asset managers1 on  
an industry-wide basis1 have facilitated
 the investment of more than            
#f1ejj1jjj1jjj in companies that are    
based in the ,people's ,republic of     
,china and that the ,federal ,government
 has red-flagged or blacklisted for     

advancing the military capabilities1 or 
supporting the human rights abuses1 of  
the ,people's ,republic of ,china4  7#b7
 ,a #bjbc report by the ,coalition for a
 ,prosperous ,america documented the    
astounding level by which financial     
institutions and investment firms that  
are based in the ,united ,states fund   
companies in the ,people's ,republic of 
,china1 including such companies that   
have been sanctioned by the ,federal    
,government and prohibited from doing   
business in the ,united ,states4  7#c7  
,a #bjba report by the ,u4,s4-,china    
,economic and ,security ,review         
,commission stated that the ,government 
of the ,people's ,republic of ,china    
permits the participation of foreign    
firms and investors in the ,chinese     
market only when that participation     
suits the national interest of the      
,people's ,republic of ,china1 and1 as a
 result1 a nominal financial opening in 
the ,people's ,republic of ,china is1 in
 reality1 a carefully managed process   

designed to reinforce state control over
 capital markets and channel foreign    
funding toward fulfilling the national  
development objectives of that          
,government4  7#d7 ,every dollar        
invested and spent in the ,people's     
,republic of ,china funds the atrocities
 of the ,government of the ,people's    
,republic of ,china1 such as the        
genocide of the ,uyghurs1 and the       
campaign of that ,government to destroy 
the ,united ,states4  7#e7 ,to protect  
the freedom to invest1 and the integrity
 of the capital markets of the ,united  
,states1 ,congress must ensure that     
those capital markets are not being     
polluted and distorted by nefarious1    
non-market economy actors1 such as the  
,government of the ,people's ,republic  
of ,china4  7#f7 ,congress must         
address-- 7,a7 the threats that the     
,government of the ,people's ,republic  
of ,china poses to investors in the     
,united ,states2 and  7,b7 the          
consequences of massive investment by   

the ,united ,states in the              
military-civil fusion apparatus of a    
regime that wishes to destroy the way of
 life in the ,united ,states4  #c4      
,prohibition  7a7 ,definitions ,in this 
section3 7#a7 ,chinese company ,the term
 ,chinese company means a company-- 7,a7
 that is incorporated in1 or otherwise  
organized under the laws of1 the        
,people's ,republic of ,china2  7,b7 the
 majority of the assets or employees of 
which are located in the ,people's      
,republic of ,china2  7,c7 that is      
majority-owned by1 controlled by1 or    
subject to the jurisdiction or direction
 of the ,government of the ,people's    
,republic of ,china2  7,d7 the majority 
of the value of which depends on the    
revenues1 profits1 market               
capitalization1 assets1 or value of a   
security 7including options to purchase 
or sell7 of a company described in      
subparagraph 7,a71 7,b71 or 7,c72 or    
7,e7 with respect to which a company    
described in subparagraph 7,a71 7,b71 or

 7,c7 has control 7as defined in section
 #bcj4dje of title #ag1 ,code of        
,federal ,regulations1 or any successor 
regulation74  7#b7 ,commission ,the term
 ,commission means the ,securities and  
,exchange ,commission4  7#c7 ,hedge fund
 ,the term hedge fund means an issuer   
that would be an investment company but 
for paragraph 7#a7 or 7#g7 of section   
#c7;c7 of the ,investment ,company ,act 
of #aidj 7#ae ,u4,s4,c4 #hj;a-#c7;c774  
7#d7 ,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   
index4  7#e7 ,investment company ,the   
term investment company has the meaning 
given the term in section #c of the     
,investment ,company ,act of #aidj 7#ae 
,u4,s4,c4 #hj;a-#c74  7#f7 ,registered  
investment company ,the term registered 
investment company means an investment  
company that is registered with the     
,commission pursuant to the ,investment 
,company ,act of #aidj 7#ae ,u4,s4,c4   

#hj;a-#a et seq474  7b7 ,prohibition on 
investment  7#a7 ,general prohibition   
7,a7 ,in general ,neither an index fund 
nor a registered investment company may 
invest in a ,chinese company4  7,b7     
,divestment period safe harbor ,with    
respect to an index fund or registered  
investment company with an investment in
 a ,chinese company on the date of      
enactment of this ,act1 subparagraph    
7,a7 shall not apply to that investment 
during the #a-year period beginning on  
that date of enactment4  7#b7           
,divestment plan ,not later than #ahj   
days after the date of enactment of this
 ,act1 each index fund and registered   
investment company with an investment in
 a ,chinese company shall develop1 and  
share with the shareholders of and      
investors in the applicable entity1 a   
written plan on how the entity will     
divest from each such investment to come
 into compliance with this subsection4  
7c7 ,civil penalty  7#a7 ,in general    
,any person that violates this section  

shall be subject to a civil penalty of  
the following amount3 7,a7 ,with respect
 to a violation of subsection 7b77#a71  
an amount not to exceed the greater of--
 7i7 #ejj1jjj2 or  7ii7 an amount that  
is twice the amount of the transaction  
that is the basis of the violation with 
respect to which the penalty is imposed4
  7,b7 ,with respect to a violation of  
subsection 7b77#b71 #ejj1jjj for each   
day the person is in violation of       
subsection 7b77#b74  7#b7 ,amount of a  
transaction defined ,for purposes of    
paragraph 7#a77;,a77ii71 the term amount
 of a transaction means-- 7,a7 with     
respect to a purchase that is the basis 
of the applicable violation1 the        
purchase price2 and  7,b7 with respect  
to the holding of an investment that is 
the basis of the applicable violation1  
the fair market value of the investment 
at the time of the violation4