Disclosing Investments in Foreign Adversaries Act of 2023
This bill requires private fund investment advisers registered with the Securities and Exchange Commission (SEC) to annually disclose the total assets of a private fund in countries of concern (i.e., North Korea, China, Russia, and Iran). The SEC must determine whether an asset is in a country of concern for purposes of this bill based on (1) the amount of capital invested in an entity that has a physical presence or employees in that country, or has a plurality of sales from that country; and (2) the proportion of that entity’s total assets and liabilities located in that country.
The SEC must publish a report annually containing a list of investment advisers with private fund assets located in a country of concern.
Further, issuers of securities must report information to the SEC regarding certain large securities transactions that are exempt from registration. This information includes the issuer’s identity, associations with entities in countries of concern, details of the transaction, the beneficial owners of the issuers, and intended use of the proceeds of the transaction.
The SEC must publish a report quarterly on transactions that involve a country of concern.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 3286 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
1st Session
S. 3286
To require the Securities and Exchange Commission to amend the rules of
the Commission relating to disclosures by advisers of private funds,
and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
November 9, 2023
Mr. Casey (for himself and Mr. Scott of Florida) introduced the
following bill; which was read twice and referred to the Committee on
Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To require the Securities and Exchange Commission to amend the rules of
the Commission relating to disclosures by advisers of private funds,
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 ``Disclosing Investments in Foreign
Adversaries Act of 2023''.
SEC. 2. DEFINITIONS.
In this Act:
(1) Commission.--The term ``Commission'' means the
Securities and Exchange Commission.
(2) Country of concern.--The term ``country of concern''--
(A) has the meaning given the term ``covered
nation'' in section 4872(d) of title 10, United States
Code; and
(B) includes a jurisdiction that the Commission, in
consultation with the Secretary of State and the
Secretary of the Treasury, determines to be subject to
the political and legal control of a covered nation, as
defined in section 4872(d) of title 10, United States
Code.
(3) Covered entity.--The term ``covered entity'' means an
entity or person that is required to file Form PF.
(4) Exempt reporting adviser.--The term ``exempt reporting
adviser'' means an investment adviser described in section
275.204-4(a) of title 17, Code of Federal Regulations, or any
successor regulation.
(5) Form adv.--The term ``Form ADV'' means the form
described in section 279.1 of title 17, Code of Federal
Regulations, or any successor regulation.
(6) Form pf.--The term ``Form PF'' means the form described
in section 279.9 of title 17, Code of Federal Regulations, or
any successor regulation.
(7) Private fund.--The term ``private fund'' has the
meaning given the term in section 202(a) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-2(a)).
(8) Private fund assets.--The term ``private fund assets''
has the meaning given the term in section 275.204(b)-1 of title
17, Code of Federal Regulations, or any successor regulation.
SEC. 3. ENHANCED DISCLOSURE REQUIREMENTS FOR ADVISERS OF PRIVATE FUNDS.
(a) Requirements.--
(1) In general.--Not later than 1 year after the date of
enactment of this Act, the Commission shall amend Form PF and
Form ADV, and the rules of the Commission governing the
submission of Form PF and Form ADV, to, subject to paragraph
(2), require each covered entity and each exempt reporting
adviser to annually disclose when submitting Form PF or Form
ADV, respectively, the total private fund assets in countries
of concern attributable to the private funds advised by the
covered entity or exempt reporting adviser, as applicable,
which shall be broken down by the percentage of those assets in
each country of concern.
(2) Application.--For the purposes of paragraph (1), the
Commission shall determine whether a private fund asset is in a
country of concern based on--
(A) the amount of capital that is invested in an
entity (including a subsidiary of an entity)--
(i) that has a physical presence or
employees in that country of concern; or
(ii) the plurality of the sales of which
are from that country of concern; and
(B) the proportion of the total assets and
liabilities of an entity described in subparagraph (A)
that are located in that country of concern.
(b) Reporting by Commission.--
(1) Publicly available reports.--
(A) In general.--Not later than 1 year after the
date on which the Commission makes the amendments
required under subsection (a), and not less frequently
than annually thereafter, the Commission shall prepare
and make publicly available a report containing a list
of covered entities and exempt reporting advisers that,
for the period covered by the report, have disclosed
more than 0 private fund assets under Form PF or Form
ADV (as amended pursuant to that subsection) in at
least 1 country of concern, which shall be aggregated
by the covered entity or exempt reporting adviser
making that disclosure.
(B) Additional requirements.--Each report prepared
and made available by the Commission under subparagraph
(A) shall--
(i) be aggregated by covered entity or
exempt reporting adviser; and
(ii) include the percentage of private fund
assets disclosed by a covered entity or exempt
reporting adviser, as applicable.
(2) Rule of construction.--Nothing in this subsection may
be construed to permit the Commission to make available any
information that appears on Form PF or Form ADV other than the
information that is included on Form PF or Form ADV as a result
of the requirements under subsection (a).
SEC. 4. EXEMPTED TRANSACTIONS.
(a) In General.--The Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.) is amended by inserting after section 13A (15 U.S.C. 78m-1)
the following:
``SEC. 13B. DISCLOSURE REQUIREMENTS RELATING TO CERTAIN EXEMPTED
TRANSACTIONS.
``(a) Definitions.--In this section:
``(1) Beneficial owner.--The term `beneficial owner' means
a person that is determined to be a beneficial owner under
section 240.13d-3 of title 17, Code of Federal Regulations, or
any successor regulation.
``(2) Country of concern.--The term `country of concern'--
``(A) has the meaning given the term `covered
nation' in section 4872(d) of title 10, United States
Code; and
``(B) includes a jurisdiction that the Commission,
in consultation with the Secretary of State and the
Secretary of the Treasury, determines to be subject to
the political and legal control of a covered nation, as
defined in section 4872(d) of title 10, United States
Code.
``(3) Covered exempted transaction.--The term `covered
exempted transaction' means an offer or sale of a security that
is--
``(A) exempt from registration under section 5 of
the Securities Act of 1933 (15 U.S.C. 77e); and
``(B) structured or intended to comply with--
``(i) section 230.506(b) of title 17, Code
of Federal regulations, or any successor
regulation;
``(ii) sections 230.901, 230.902, and
230.903 of title 17, Code of Federal
Regulations, or any successor regulations; or
``(iii) section 230.144A of title 17, Code
of Federal Regulations, or any successor
regulation.
``(b) Requirement.--
``(1) In general.--Notwithstanding any other provision of
law, in the case of an issuer that conducts a covered exempted
transaction described in paragraph (2), that issuer shall
provide to the Commission, at such time and in such manner as
the Commission may prescribe, the following information:
``(A) The identity of the issuer.
``(B) The place of incorporation of the issuer.
``(C) Whether the issuer is associated with at
least 1 consolidated entity, the plurality of the
assets of which are in a country of concern.
``(D) Whether the issuer is associated with at
least 1 consolidated entity that is incorporated in a
country of concern.
``(E) The amount of securities sold pursuant to the
covered exempted transaction and the net proceeds to
the issuer.
``(F) The beneficial owners of the issuer.
``(G) The intended use of the proceeds from the
covered exempted transaction, including each country in
which the issuer intends to invest those proceeds,
which shall be broken down by the percentage of net
proceeds by industry within each such country.
``(H) The exemption the issuer relies on with
respect to the covered exempted transaction.
``(2) Particular covered exempted transaction described.--A
covered exempted transaction described in this paragraph is,
with respect to the issuer offering or selling the security
that is the subject of the covered exempted transaction, either
of the following instances:
``(A) An offer or sale of securities in an amount
that is not less than $25,000,000.
``(B) An offer or sale of a security such that the
offer or sale, together with all covered exempted
transactions by that issuer during the 1-year period
preceding the date on which the issuer offers or sells
the security, constitutes offers or sales in the
aggregate of an amount that is not less than
$50,000,000.
``(c) Authority To Revise and Promulgate Rules, Regulations, and
Forms.--The Commission shall, for the protection of investors and fair
and orderly markets--
``(1) revise and issue such rules, regulations, and forms
as may be necessary to carry out this section; and
``(2) issue rules to set conditions that limit the future
use of covered exempted transactions for issuers that do not
comply with the disclosure requirements of this section.
``(d) Applicability.--This section shall apply with respect to any
covered exempted transaction that occurs on or after the date that is 1
year after the date of enactment of this section.
``(e) Reports.--The Commission shall, on a quarterly basis, prepare
and make publicly available a report that includes all information
submitted by an issuer under this section during the quarter covered by
the report, if that issuer--
``(1) is--
``(A) incorporated in a country of concern; or
``(B) incorporated outside of a country of concern
and is associated with at least 1 consolidated entity--
``(i) the plurality of the assets of which
are in a country of concern; or
``(ii) that is incorporated in a country of
concern; or
``(2) discloses in a filing made pursuant to this section
that the issuer intends to invest the proceeds from a covered
exempted transaction in a country of concern.''.
<all>
Introduced in Senate
Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
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