Disclosing Investments in Foreign Adversaries Act of 2025
Summary
The "Disclosing Investments in Foreign Adversaries Act of 2025" aims to increase transparency regarding investments in countries of concern by investment advisors and issuers of securities. It mandates enhanced disclosure requirements for advisers of private funds concerning their assets in countries of concern. The bill also requires issuers engaging in certain exempted transactions to disclose information about their operations and beneficial owners, especially concerning ties to countries of concern.
Expected Effects
This act will likely increase the compliance burden on investment advisors and issuers. It will also provide the SEC and the public with more information about the flow of capital to and from countries of concern. This could lead to changes in investment strategies and potentially deter investment in those countries.
Potential Benefits
- Increased transparency in financial markets regarding investments linked to countries of concern.
- Enhanced ability for investors and regulators to assess risks associated with investments in foreign adversaries.
- Potential reduction in the flow of capital to entities controlled by or operating in countries of concern.
- Greater awareness among investment advisors and issuers about the geopolitical implications of their investment decisions.
- Improved data for policymakers to make informed decisions about national security and economic policy.
Most Benefited Areas:
Potential Disadvantages
- Increased compliance costs for investment advisors and issuers, potentially impacting smaller firms disproportionately.
- Potential for overbroad definitions of "country of concern," leading to unnecessary restrictions on investment.
- Risk of chilling legitimate investment activities due to increased scrutiny and reporting requirements.
- Possible retaliatory measures from countries of concern, affecting international trade and investment.
- Difficulty in accurately determining the location and control of assets, leading to incomplete or misleading disclosures.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's focus on regulating interstate commerce through financial disclosures aligns with the Commerce Clause (Article I, Section 8, Clause 3) of the U.S. Constitution, which grants Congress the power to regulate commerce with foreign nations and among the several states. The reporting requirements do not appear to infringe upon individual liberties protected by the Bill of Rights. However, the definitions of "country of concern" and "covered investment advisor" must be carefully crafted to avoid vagueness or undue delegation of legislative authority.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).