PRC Broker-Dealers and Investment Advisers Moratorium Act
- Bill Number
- H.R. 9028
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2026-05-26: Referred to the House Committee on Financial Services.
- Last Updated
- 2026-06-29T15:44:48Z
AI-Generated Summary
Purpose This legislation aims to restrict certain financial entities with ties to the People's Republic of China (PRC) from registering with the U.S. Securities and Exchange Commission (SEC) under securities laws. It establishes a temporary 5-year prohibition on such registrations for brokers, dealers, and investment advisers meeting specified ownership or operational criteria linked to the PRC.
Key Provisions
- Defines "control" as beneficial ownership, directly or indirectly, of more than 15 percent of an entity's voting securities.
- Prohibits SEC registration for brokers or dealers under the Securities Exchange Act of 1934 if the entity is:
- Organized under PRC laws;
- Controlled by a PRC-organized entity;
- Controlled by a PRC national residing in the PRC; or
- Receives services from a PRC-organized associated person in areas such as platform infrastructure, network services, or software development, maintenance, or support.
- Prohibits SEC registration for investment advisers under the Investment Advisers Act of 1940 under similar conditions, including if an affiliate organized under PRC laws provides services like software development, product development, or customer service.
- Both prohibitions automatically expire 5 years after the bill's enactment, after which the added subsections are repealed.
Significant Changes to Existing Law The bill adds new subsections (p) to Section 15 of the Securities Exchange Act of 1934 and (o) to Section 203 of the Investment Advisers Act of 1940. These create registration barriers based on PRC connections, marking a shift from current rules that focus primarily on fitness, disclosure, and compliance without nationality-based ownership restrictions. The changes include a built-in sunset clause not present in the underlying statutes.
Potential Impacts
- On government agencies: The SEC would need to implement new screening processes during registration reviews, potentially increasing administrative workload and requiring coordination with other federal entities for ownership verification.
- On citizens and markets: U.S. investors may face reduced options from firms with PRC ties, possibly affecting access to certain financial products or services.
- On international relations: The measure could strain U.S.-PRC economic ties by limiting cross-border financial operations, with possible reciprocal actions from Chinese authorities affecting U.S. firms.
Main Stakeholders Affected
- Brokers, dealers, and investment advisers with PRC organizational ties, control, or service relationships.
- PRC-organized entities and nationals residing in the PRC who seek U.S. market access.
- The SEC, as the primary regulator enforcing the new rules.
- U.S. investors and financial market participants who may interact with affected firms.
Notable Legal, Constitutional, or Political Implications The temporary 5-year duration frames the measure as a time-limited moratorium rather than a permanent ban. The 15 percent control threshold introduces a specific ownership metric for enforcement. The focus on services from PRC entities in infrastructure and software raises questions about the scope of "associated persons" and "affiliates" under existing securities definitions.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Lawler, Michael [R-NY-17]
Cosponsors (1)
Rep. Gottheimer, Josh [D-NJ-5]
Recent Actions
- 2026-05-26: Referred to the House Committee on Financial Services.
- 2026-05-26: Introduced in House
- 2026-05-26: Introduced in House
Bill Versions
- PRC Broker-Dealers and Investment Advisers Moratorium Act — issued 2026-05-26 — PDF (4 pages)