[Congressional Record Volume 168, Number 152 (Wednesday, September 21, 2022)]
[Extensions of Remarks]
[Pages E959-E960]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




OPPOSING H.R. 8520, THE COUNTERING UNTRUSTED TELECOMMUNICATIONS ABROAD 
                                  ACT

                                 ______
                                 

                        HON. PATRICK T. McHENRY

                           of north carolina

                    in the house of representatives

                     Wednesday, September 21, 2022

  Mr. McHENRY. Madam Speaker, I rise, along with Republican Members of 
the Financial Services Committee, Subcommittee on Investor Protection, 
Entrepreneurship, and Capital Markets--Rep. Bill Huizenga, Rep. French 
Hill, Rep. Tom Emmer, Rep. Alexander X. Mooney, Rep. Warren Davidson, 
Rep. Trey Hollingsworth, Rep. Anthony Gonzalez, Rep. Bryan Steil and 
Rep. Van Taylor, to express our serious concerns with H.R. 8520, the 
Countering Untrusted Telecommunications Abroad Act. Although this bill 
was referred to the Financial Services Committee, the referral was 
waived without understanding the bill's impact on U.S. capital markets.
  We believe that H.R. 8520 implicates securities disclosure 
obligations in a way that runs counter to our existing principles-based 
disclosure framework. As such, H.R. 8520 risks setting a precedent in 
support of policies that run counter to our free-market principles and 
are harmful to the competitiveness of U.S. capital markets.
  In particular, we are concerned that H.R. 8520 requires publicly 
traded companies to make certain disclosures to the Securities and 
Exchange Commission to advance foreign policy and national security 
objectives. As we have stated on several previous occasions this is 
ineffective. Sanctioning is the most effective way to achieve foreign 
policy and national security objectives--not our securities laws.
  Hijacking U.S. investment disclosure rules to accomplish extraneous 
policy goals compromises the strength of American capital markets, 
disincentivizes companies from going or remaining public by increasing 
compliance costs and reduces investment opportunities for retail 
investors and retirement savers. Moreover, the SEC is not the 
appropriate entity for advancing our Nation's national security or 
foreign policy agenda. Such issues should be handled by agencies with 
expertise in overseeing more effective tools like sanctions and export 
controls.
  Similarly, H.R. 8520 inappropriately considers all information of a 
certain kind ``material,'' in this case information related to 
contracts for--or usage of--telecommunications equipment or services 
from certain providers. Currently, under the Securities Exchange Act of 
1934, public companies are required to file annual reports with the SEC 
that are made public to disclose company information that investors 
would find material to making investment decisions. It is not Congress' 
job to tell public companies what information is and is not material. 
Instead, it is up to the individual company to make that determination 
on its own. Otherwise, companies will be forced to increase costs and 
regulatory risks to comply with disclosure obligations that do not 
materially influence investment decisions.
  Moreover, this bill is mandating compliance with a disclosure regime 
that requires disclosing information that is likely unknowable. 
Specifically, the bill requires that publicly traded companies disclose 
if they or ``any affiliate'' used or entered into contracts to use 
covered telecommunications equipment or services. Inexplicably, the 
bill does not define ``any affiliate.'' Still, in many instances, it 
will be impossible for many companies to know whether their affiliates 
contracted for or used such services. To make matters worse, when 
companies attempt to disclose this impossible-to-discern information in 
a manner that later turns out to be mistaken, they would be liable for 
securities fraud.
  The flawed approach set forth in this bill sets a dangerous 
precedent. H.R. 8520 should have been marked up in the Financial 
Services Committee prior to floor consideration in order to fully 
debate the policy implications. Ultimately, this bill will limit 
choices for everyday investors, encourage public companies to go 
private, and weaken the health of U.S. public markets.
  For these reasons, we oppose H.R. 8520.

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