ASA Submits Comments on Treasury Outbound Investment Proposal

WASHINGTON – The American Securities Association (ASA) today sent a letter to the Treasury Department welcoming a recent outbound investment proposal that would either require disclosure or outright prohibit U.S. investment in certain Chinese Communist Party (CCP)-backed companies and industries, while also calling on policymakers to do more to close the “passive index loophole” facilitating the ongoing outflow of retail investor savings to Chinese companies by way of index funds.

“ASA commends Treasury for proposing to stop the flow of U.S. investor dollars to CCP-backed entities that pose a threat to the national security of the United States and the privacy of every American citizen,” said ASA President and CEO Chris Iacovella. “The CCP is an authoritarian regime that abuses the human rights of its citizens, indiscriminately destroys the environment, and aggressively subverts American society. We are hopeful the bipartisan acknowledgement of the threat posed by the CCP to America’s working families, investors, and small businesses will lead to further action by Congress and the Executive Branch.”

ASA has been the leading financial services trade advocating to hold China accountable through the capital markets. In the letter, ASA outlined how a regulatory loophole exists which allows passive index funds and index providers to direct American investor dollars into mainland Chinese companies by including them in international or emerging market indices. Inclusion in an index can lead to billions of dollars being steered into opaque Chinese companies, or businesses that develop technologies that can be used against the U.S. and our allies.

ASA is also encouraged by leadership on this issue in Congress, including a recent bill introduced by Reps. Brad Sherman and Victoria Spartz that would prohibit SEC-registered index funds from investing in Chinese companies. Sen. Rick Scott also recently introduced bills that would prohibit fund investments in Chinese companies as well as U.S. investment in “A share”-listed companies on CCP-controlled exchanges.

To read ASA President and CEO Iacovella’s recent contribution to the China Transparency Report “How Wall Street Fund’s China’s Rise”, click here.

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The American Securities Association (ASA) represents the retail and institutional capital markets interests of regional financial services firms who provide Main Street businesses with access to capital and advise hardworking Americans how to create and preserve wealth. ASA’s mission is to promote trust and confidence among investors, facilitate capital formation, and support efficient and competitively balanced capital markets. This mission advances financial independence, stimulates job creation, and increases prosperity. The ASA has a geographically diverse membership of almost one hundred members that spans the Heartland, Southwest, Southeast, Atlantic, and Pacific Northwest regions of the United States.