This bill would prohibit index funds—investment funds designed to track market indexes—from investing in Chinese companies. The legislation defines "Chinese companies" broadly to include firms incorporated in China, those with majority assets or employees there, those controlled by the Chinese government, and companies whose value depends heavily on Chinese firms. Index funds that currently hold Chinese investments would have a 180-day grace period from the bill's enactment to divest those holdings. Any person or fund that violates the prohibition would face civil penalties of up to $250,000 or twice the value of the prohibited investment, whichever is greater. The Securities and Exchange Commission would be authorized to issue rules to enforce the ban.
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