II
118THCONGRESS
1
STSESSION 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
NOVEMBER9, 2023
Mr. C
ASEY(for himself and Mr. SCOTTof 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 disclo-
sures by advisers of private funds, and for other pur-
poses.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Disclosing Investments 4
in Foreign Adversaries Act of 2023’’. 5
SEC. 2. DEFINITIONS. 6
In this Act: 7
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(1) COMMISSION.—The term ‘‘Commission’’ 1
means the Securities and Exchange Commission. 2
(2) C
OUNTRY OF CONCERN .—The term ‘‘coun-3
try of concern’’— 4
(A) has the meaning given the term ‘‘cov-5
ered nation’’ in section 4872(d) of title 10, 6
United States Code; and 7
(B) includes a jurisdiction that the Com-8
mission, in consultation with the Secretary of 9
State and the Secretary of the Treasury, deter-10
mines to be subject to the political and legal 11
control of a covered nation, as defined in sec-12
tion 4872(d) of title 10, United States Code. 13
(3) C
OVERED ENTITY.—The term ‘‘covered en-14
tity’’ means an entity or person that is required to 15
file Form PF. 16
(4) E
XEMPT REPORTING ADVISER .—The term 17
‘‘exempt reporting adviser’’ means an investment ad-18
viser described in section 275.204–4(a) of title 17, 19
Code of Federal Regulations, or any successor regu-20
lation. 21
(5) F
ORM ADV.—The term ‘‘Form ADV’’ 22
means the form described in section 279.1 of title 23
17, Code of Federal Regulations, or any successor 24
regulation. 25
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(6) FORM PF.—The term ‘‘Form PF’’ means 1
the form described in section 279.9 of title 17, Code 2
of Federal Regulations, or any successor regulation. 3
(7) P
RIVATE FUND.—The term ‘‘private fund’’ 4
has the meaning given the term in section 202(a) of 5
the Investment Advisers Act of 1940 (15 U.S.C. 6
80b–2(a)). 7
(8) P
RIVATE FUND ASSETS.—The term ‘‘private 8
fund assets’’ has the meaning given the term in sec-9
tion 275.204(b)–1 of title 17, Code of Federal Regu-10
lations, or any successor regulation. 11
SEC. 3. ENHANCED DISCLOSURE REQUIREMENTS FOR AD-12
VISERS OF PRIVATE FUNDS. 13
(a) R
EQUIREMENTS.— 14
(1) I
N GENERAL.—Not later than 1 year after 15
the date of enactment of this Act, the Commission 16
shall amend Form PF and Form ADV, and the 17
rules of the Commission governing the submission of 18
Form PF and Form ADV, to, subject to paragraph 19
(2), require each covered entity and each exempt re-20
porting adviser to annually disclose when submitting 21
Form PF or Form ADV, respectively, the total pri-22
vate fund assets in countries of concern attributable 23
to the private funds advised by the covered entity or 24
exempt reporting adviser, as applicable, which shall 25
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be broken down by the percentage of those assets in 1
each country of concern. 2
(2) A
PPLICATION.—For the purposes of para-3
graph (1), the Commission shall determine whether 4
a private fund asset is in a country of concern based 5
on— 6
(A) the amount of capital that is invested 7
in an entity (including a subsidiary of an enti-8
ty)— 9
(i) that has a physical presence or em-10
ployees in that country of concern; or 11
(ii) the plurality of the sales of which 12
are from that country of concern; and 13
(B) the proportion of the total assets and 14
liabilities of an entity described in subpara-15
graph (A) that are located in that country of 16
concern. 17
(b) R
EPORTING BYCOMMISSION.— 18
(1) P
UBLICLY AVAILABLE REPORTS .— 19
(A) I
N GENERAL.—Not later than 1 year 20
after the date on which the Commission makes 21
the amendments required under subsection (a), 22
and not less frequently than annually there-23
after, the Commission shall prepare and make 24
publicly available a report containing a list of 25
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covered entities and exempt reporting advisers 1
that, for the period covered by the report, have 2
disclosed more than 0 private fund assets under 3
Form PF or Form ADV (as amended pursuant 4
to that subsection) in at least 1 country of con-5
cern, which shall be aggregated by the covered 6
entity or exempt reporting adviser making that 7
disclosure. 8
(B) A
DDITIONAL REQUIREMENTS .—Each 9
report prepared and made available by the 10
Commission under subparagraph (A) shall— 11
(i) be aggregated by covered entity or 12
exempt reporting adviser; and 13
(ii) include the percentage of private 14
fund assets disclosed by a covered entity or 15
exempt reporting adviser, as applicable. 16
(2) R
ULE OF CONSTRUCTION .—Nothing in this 17
subsection may be construed to permit the Commis-18
sion to make available any information that appears 19
on Form PF or Form ADV other than the informa-20
tion that is included on Form PF or Form ADV as 21
a result of the requirements under subsection (a). 22
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SEC. 4. EXEMPTED TRANSACTIONS. 1
(a) I
NGENERAL.—The Securities Exchange Act of 2
1934 (15 U.S.C. 78a et seq.) is amended by inserting after 3
section 13A (15 U.S.C. 78m–1) the following: 4
‘‘SEC. 13B. DISCLOSURE REQUIREMENTS RELATING TO 5
CERTAIN EXEMPTED TRANSACTIONS. 6
‘‘(a) D
EFINITIONS.—In this section: 7
‘‘(1) B
ENEFICIAL OWNER .—The term ‘bene-8
ficial owner’ means a person that is determined to 9
be a beneficial owner under section 240.13d–3 of 10
title 17, Code of Federal Regulations, or any suc-11
cessor regulation. 12
‘‘(2) C
OUNTRY OF CONCERN .—The term ‘coun-13
try of concern’— 14
‘‘(A) has the meaning given the term ‘cov-15
ered nation’ in section 4872(d) of title 10, 16
United States Code; and 17
‘‘(B) includes a jurisdiction that the Com-18
mission, in consultation with the Secretary of 19
State and the Secretary of the Treasury, deter-20
mines to be subject to the political and legal 21
control of a covered nation, as defined in sec-22
tion 4872(d) of title 10, United States Code. 23
‘‘(3) C
OVERED EXEMPTED TRANSACTION .—The 24
term ‘covered exempted transaction’ means an offer 25
or sale of a security that is— 26
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‘‘(A) exempt from registration under sec-1
tion 5 of the Securities Act of 1933 (15 U.S.C. 2
77e); and 3
‘‘(B) structured or intended to comply 4
with— 5
‘‘(i) section 230.506(b) of title 17, 6
Code of Federal regulations, or any suc-7
cessor regulation; 8
‘‘(ii) sections 230.901, 230.902, and 9
230.903 of title 17, Code of Federal Regu-10
lations, or any successor regulations; or 11
‘‘(iii) section 230.144A of title 17, 12
Code of Federal Regulations, or any suc-13
cessor regulation. 14
‘‘(b) R
EQUIREMENT.— 15
‘‘(1) I
N GENERAL.—Notwithstanding any other 16
provision of law, in the case of an issuer that con-17
ducts a covered exempted transaction described in 18
paragraph (2), that issuer shall provide to the Com-19
mission, at such time and in such manner as the 20
Commission may prescribe, the following informa-21
tion: 22
‘‘(A) The identity of the issuer. 23
‘‘(B) The place of incorporation of the 24
issuer. 25
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‘‘(C) Whether the issuer is associated with 1
at least 1 consolidated entity, the plurality of 2
the assets of which are in a country of concern. 3
‘‘(D) Whether the issuer is associated with 4
at least 1 consolidated entity that is incor-5
porated in a country of concern. 6
‘‘(E) The amount of securities sold pursu-7
ant to the covered exempted transaction and 8
the net proceeds to the issuer. 9
‘‘(F) The beneficial owners of the issuer. 10
‘‘(G) The intended use of the proceeds 11
from the covered exempted transaction, includ-12
ing each country in which the issuer intends to 13
invest those proceeds, which shall be broken 14
down by the percentage of net proceeds by in-15
dustry within each such country. 16
‘‘(H) The exemption the issuer relies on 17
with respect to the covered exempted trans-18
action. 19
‘‘(2) P
ARTICULAR COVERED EXEMPTED TRANS -20
ACTION DESCRIBED .—A covered exempted trans-21
action described in this paragraph is, with respect to 22
the issuer offering or selling the security that is the 23
subject of the covered exempted transaction, either 24
of the following instances: 25
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‘‘(A) An offer or sale of securities in an 1
amount that is not less than $25,000,000. 2
‘‘(B) An offer or sale of a security such 3
that the offer or sale, together with all covered 4
exempted transactions by that issuer during the 5
1-year period preceding the date on which the 6
issuer offers or sells the security, constitutes of-7
fers or sales in the aggregate of an amount that 8
is not less than $50,000,000. 9
‘‘(c) A
UTHORITYTOREVISE AND PROMULGATE 10
R
ULES, REGULATIONS, ANDFORMS.—The Commission 11
shall, for the protection of investors and fair and orderly 12
markets— 13
‘‘(1) revise and issue such rules, regulations, 14
and forms as may be necessary to carry out this sec-15
tion; and 16
‘‘(2) issue rules to set conditions that limit the 17
future use of covered exempted transactions for 18
issuers that do not comply with the disclosure re-19
quirements of this section. 20
‘‘(d) A
PPLICABILITY.—This section shall apply with 21
respect to any covered exempted transaction that occurs 22
on or after the date that is 1 year after the date of enact-23
ment of this section. 24
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‘‘(e) REPORTS.—The Commission shall, on a quar-1
terly basis, prepare and make publicly available a report 2
that includes all information submitted by an issuer under 3
this section during the quarter covered by the report, if 4
that issuer— 5
‘‘(1) is— 6
‘‘(A) incorporated in a country of concern; 7
or 8
‘‘(B) incorporated outside of a country of 9
concern and is associated with at least 1 con-10
solidated entity— 11
‘‘(i) the plurality of the assets of 12
which are in a country of concern; or 13
‘‘(ii) that is incorporated in a country 14
of concern; or 15
‘‘(2) discloses in a filing made pursuant to this 16
section that the issuer intends to invest the proceeds 17
from a covered exempted transaction in a country of 18
concern.’’. 19
Æ
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