In a bid to increase transparency within financial markets, U.S. Senators Bob Casey (D-PA) and Rick Scott (R-FL) introduced the Disclosing Investments in Foreign Adversaries Act on Thursday. The bipartisan legislation aims to shed light on investments made by American hedge funds and private equity firms in countries of concern like China and Russia.
As it stands, private equity, hedge funds, and venture capital firms are able to invest Americans’ savings and pensions in these nations without public knowledge. This newly proposed bill would require these investment entities to disclose any assets invested in such countries to the Securities and Exchange Commission (SEC) annually. Moreover, the SEC would be required to release a public report detailing firms investing in these nations and the percentage of invested assets. Entities selling stock in private markets would also need to disclose the recipient of the investment, the intended location of the investment, and its purpose.
Senator Casey stressed the importance of this transparency, stating, “Americans deserve to know where and how their savings are being invested.” He pointed out that it is crucial to understand if American money is being used to bolster the economies of adversaries who steal technological know-how and jobs from the U.S.
Echoing Senator Casey’s sentiments, Senator Scott stated, “Our adversaries, like Communist China, benefit from a complete lack of transparency allowing them to hide and fund bad behavior—especially when it comes to financial markets.”
The bill has been met with approval from organizations like the American Securities Association (ASA) and FDD Action. ASA President & CEO Chris Iacovella commended the Senators for introducing the bill and noted the importance of halting the Chinese Communist Party’s access to American capital. Similarly, FDD Action endorsed the legislation, highlighting its potential to protect national security, promote financial oversight, and ensure U.S. funds do not strengthen the technological capabilities and industrial bases of America’s adversaries.
The Disclosing Investments in Foreign Adversaries Act of 2023 aims to provide transparency into individual funds’ investments in the PRC, Iran, Russia, North Korea, and jurisdictions determined to be subject to the political and legal control of a covered nation. This move signifies an important step towards holding financial institutions accountable and protecting American interests.
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