S2552-119

1. Short title This Act may be cited as the PRC Broker-Dealers and Investment Advisers Moratorium Act.

2. Prohibitions Section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o–3) is amended by adding at the end the following: In this subsection: The term affiliate has the meaning given the term in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841). The term control means beneficially owning, either directly or through 1 or more companies, more than 25 percent of the voting securities of an entity. The term U.S. person means— a United States citizen or an alien lawfully admitted for permanent residence to the United States; or an entity organized under the laws of the United States or any jurisdiction within the United States, including a foreign branch of such an entity. A broker or dealer shall be prohibited from being a member of a national securities association if the broker or dealer— is controlled by an entity organized under the laws of, or otherwise subject to the jurisdiction of, the People’s Republic of China; is controlled by a national of the People’s Republic of China who resides in the People’s Republic of China; or has an affiliate organized under the laws of, or otherwise subject to the jurisdiction of, the People’s Republic of China that provides the broker or dealer with essential services, including software development or support, product development, or customer service. A national securities association shall have such examination authority over a member that is a broker or dealer as the association determines to be necessary to ensure compliance with this subsection, including the right to examine the books and facilities of a broker or dealer located in a foreign country. On the date that is 5 years after the date of enactment of this Act, section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 78o–3) is amended by striking subsection (o), as added by paragraph (1) of this subsection. Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b–3) is amended by adding at the end the following: In this subsection: The term affiliate has the meaning given the term in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841). The term control means beneficially owning, either directly or through 1 or more companies, more than 25 percent of the voting securities of an entity. The term U.S. person means— a United States citizen or an alien lawfully admitted for permanent residence to the United States; or an entity organized under the laws of the United States or any jurisdiction within the United States, including a foreign branch of such an entity. A person shall be prohibited from being registered as an investment adviser if the person— is controlled by an entity organized under the laws of, or otherwise subject to the jurisdiction of, the People’s Republic of China; is controlled by a national of the People’s Republic of China who resides in the People’s Republic of China; or has an affiliate organized under the laws of, or otherwise subject to the jurisdiction of, the People’s Republic of China that provides the broker or dealer with essential services, including software development or support, product development, or customer service. The Commission shall have such examination authority over an investment adviser as the Commission determines to be necessary to ensure compliance with this subsection, including the right to examine the books and facilities of an investment adviser in a foreign country. On the date that is 5 years after the date of enactment of this Act, section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b–3) is amended by striking subsection (o), as added by paragraph (1) of this subsection. (o)Prohibition on membership related to Chinese ownership(1)DefinitionsIn this subsection:(A)AffiliateThe term affiliate has the meaning given the term in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841).(B)ControlThe term control means beneficially owning, either directly or through 1 or more companies, more than 25 percent of the voting securities of an entity.(C)U.S. personThe term U.S. person means—(i)a United States citizen or an alien lawfully admitted for permanent residence to the United States; or(ii)an entity organized under the laws of the United States or any jurisdiction within the United States, including a foreign branch of such an entity.(2)ProhibitionA broker or dealer shall be prohibited from being a member of a national securities association if the broker or dealer—(A)is controlled by an entity organized under the laws of, or otherwise subject to the jurisdiction of, the People’s Republic of China;(B)is controlled by a national of the People’s Republic of China who resides in the People’s Republic of China; or(C)has an affiliate organized under the laws of, or otherwise subject to the jurisdiction of, the People’s Republic of China that provides the broker or dealer with essential services, including software development or support, product development, or customer service.(3)Examination authorityA national securities association shall have such examination authority over a member that is a broker or dealer as the association determines to be necessary to ensure compliance with this subsection, including the right to examine the books and facilities of a broker or dealer located in a foreign country.. (o)Prohibition on registration related to Chinese ownership(1)DefinitionsIn this subsection:(A)AffiliateThe term affiliate has the meaning given the term in section 2 of the Bank Holding Company Act of 1956 (12 U.S.C. 1841).(B)ControlThe term control means beneficially owning, either directly or through 1 or more companies, more than 25 percent of the voting securities of an entity.(C)U.S. personThe term U.S. person means—(i)a United States citizen or an alien lawfully admitted for permanent residence to the United States; or(ii)an entity organized under the laws of the United States or any jurisdiction within the United States, including a foreign branch of such an entity.(2)ProhibitionA person shall be prohibited from being registered as an investment adviser if the person—(A)is controlled by an entity organized under the laws of, or otherwise subject to the jurisdiction of, the People’s Republic of China;(B)is controlled by a national of the People’s Republic of China who resides in the People’s Republic of China; or(C)has an affiliate organized under the laws of, or otherwise subject to the jurisdiction of, the People’s Republic of China that provides the broker or dealer with essential services, including software development or support, product development, or customer service.(3)Examination authorityThe Commission shall have such examination authority over an investment adviser as the Commission determines to be necessary to ensure compliance with this subsection, including the right to examine the books and facilities of an investment adviser in a foreign country..