[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8800 Introduced in House (IH)]

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116th CONGRESS
  2d Session
                                H. R. 8800

To prohibit the trading of the securities of certain Communist Chinese 
  military companies on a national securities exchange, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 20, 2020

Mr. Gallagher (for himself, Ms. Cheney, and Mr. Stewart) introduced the 
   following bill; which was referred to the Committee on Financial 
 Services, and in addition to the Committees on Foreign Affairs, Ways 
and Means, Armed Services, Education and Labor, Intelligence (Permanent 
  Select), and Oversight and Reform, for a period to be subsequently 
   determined by the Speaker, in each case for consideration of such 
 provisions as fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 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.--The term ``control'' has the meaning given 
        the term 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)).
            (5) Insurance company.--The term ``insurance company'' has 
        the meaning given the term in section 2(a) of the Investment 
        Company Act of 1940 (15 U.S.C. 80a-2(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 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:
            ``(6)(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)--
                                    (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)(6)(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 shall 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 any 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 subparagraph 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 subparagraph 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 
                                subclause (I)(bb) (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 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), 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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