H.R. 7758

[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 7758 Introduced in House (IH)]

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118th CONGRESS
2d Session
H. R. 7758

To prohibit index funds from investing in Chinese companies, and for 
other purposes.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

March 20, 2024

Mr. Sherman (for himself and Mrs. Spartz) introduced the following 
bill; which was referred to the Committee on Financial Services

_______________________________________________________________________

A BILL

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. 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.--
(1) In general.--Any person who violates this section shall 
be subject to a civil penalty in an amount not to exceed the 
greater of--
(A) $250,000; or
(B) 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.
(2) Amount of a transaction defined.--For purposes of 
paragraph (1)(B), the term ``amount of a transaction'' means--
(A) with respect to a purchase that violates this 
section, the purchase price; and
(B) with respect to the holding of an investment 
that violates this section, the fair market value of 
the investment at the time of the violation.
(d) Rulemaking.--The Securities and Exchange Commission may issue 
such rules as may be necessary to carry out this section.
(e) Definitions.--In this section:
(1) Chinese company.--The term ``Chinese company'' means a 
company--
(A) incorporated or otherwise organized in China;
(B) that has a majority of its assets or employees 
located in 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 company's value depends 
on the revenues, profits, market capitalization, 
assets, or the value of a security (including options 
to purchase or sell) of a company described under 
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 under section 
230.405 of title 17, Code of Federal Regulations, of 
the company, as determined by the Securities and 
Exchange Commission.
(2) 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)).
(3) 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.
(4) Investment company.--The term ``investment company'' 
has the meaning given that term under section 3 of the 
Investment Company Act of 1940 (15 U.S.C. 80a-3).
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