The bill amends the Investment Advisers Act and the Securities Exchange Act to compel new transparency about private capital connected to jurisdictions the statute treats as U.S. national‑security concerns. It imposes an annual reporting obligation on certain investment advisers to disclose private‑fund assets located in or attributable to ‘‘countries of concern’’ and directs the SEC to publish an aggregated list of advisers that report any such exposure.
Separately, the bill creates a new disclosure regime for larger exempt securities offerings (those relying on section 4 exemptions and common safe‑harbors such as Reg D 506(b), Reg S, and Rule 144A). Issuers meeting $25 million (single) or $50 million (aggregate 12‑month) thresholds must supply the SEC with identities, beneficial owners, incorporation and consolidated‑entity links to countries of concern, and a country/industry breakdown of intended use of proceeds; the SEC must publish quarterly reports and may limit future use of exempted offerings for noncompliant issuers.
For compliance teams and counsel this means new data collection, reporting, and potential market effects on private placements with foreign ties.
At a Glance
What It Does
Adds a new subsection to Section 204 of the Investment Advisers Act requiring covered advisers to file annual reports quantifying private‑fund assets in ‘‘countries of concern’’ and instructs the SEC to publish aggregated adviser lists. Adds a new Section 13B to the Exchange Act requiring detailed issuer filings for covered exempted transactions above set dollar thresholds and directs quarterly public reporting.
Who It Affects
Investment advisers with at least $150 million in private‑fund AUM (including some exempt advisers under sections 203(l)/(m)), private funds, issuers conducting large exempt offerings (Reg D 506(b), Reg S, Rule 144A), placement agents, and counsel performing due diligence on cross‑border capital flows.
Why It Matters
The measure pushes transparency of private capital into jurisdictions identified as U.S. security concerns, creates compliance and disclosure obligations formerly avoided by exempt transactions, and gives the SEC new authority to condition use of exempt offerings — a structural shift in oversight of private placements tied to geopolitical risk.
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What This Bill Actually Does
The bill builds two separate disclosure tracks aimed at private capital and exempt offerings. For private funds it creates a reporting duty placed squarely on the adviser: covered investment advisers must quantify how much private‑fund capital they manage that is "in" a country of concern and report that annually to the SEC, broken out by percentage per country.
The adviser definition captures registered advisers with at least $150 million in private‑fund assets under management, and it also reaches advisers relying on certain registration exemptions under the Advisers Act.
The text sets out how the SEC should decide whether a private‑fund asset is to be treated as located in a country of concern. The agency looks to metrics such as capital invested in entities with a physical presence or workforce in the country, entities whose plurality of sales are in that country, and the share of an entity’s total assets and liabilities located in that jurisdiction.
The bill also requires the SEC to compile and publish, at least annually, an aggregated list of covered advisers that disclosed any private‑fund exposure to countries of concern and to report those exposures as percentages.On the transactions side, the bill creates a new Exchange Act provision requiring issuers that use particular exemptions for large private‑placement or cross‑border offerings to submit detailed filings to the SEC. The filing list is specific: issuer identity and place of incorporation; whether the issuer is tied to consolidated entities with a plurality of assets or incorporation in a country of concern; amount sold and net proceeds; beneficial owners; the exemption claimed; and a breakdown, by country and by industry percentages, of intended use of proceeds.
This regime applies to single exempt deals of $25 million or more and to issuers whose exempt deals aggregate $50 million or more within 12 months.The bill gives the SEC two enforcement tools: rulemaking authority to implement the new filing requirements and the ability to impose conditions that limit future use of exempt transactions by issuers that fail to comply. For the exempt‑transaction disclosures the bill sets a delayed effective date — the requirements apply to covered exempted transactions that occur on or after one year after enactment — and it mandates quarterly public reporting by the SEC for filings from issuers incorporated in, tied to, or intending to invest proceeds in countries of concern.
The statute also anchors the ‘‘country of concern’’ concept to 10 U.S.C. 4872(f) while letting the SEC expand the list in consultation with State and Treasury.
The Five Things You Need to Know
A “covered investment adviser” is an adviser required to register with the SEC that, with related persons, manages at least $150,000,000 in private‑fund assets, and the definition explicitly also reaches advisers relying on the exemptions in section 203(l) or (m).
The SEC must determine whether a private‑fund asset is associated with a country of concern by looking at capital invested in entities that have a physical presence or employees there or whose plurality of sales come from that country, and by the proportion of an entity’s assets and liabilities located there.
The new Exchange Act §13B makes issuers conducting exempted transactions (Reg D 506(b), Reg S, or Rule 144A style offerings) provide to the SEC: issuer identity, incorporation, beneficial owners, securities sold and net proceeds, the exemption relied on, links to consolidated entities in countries of concern, and a country/industry breakdown of intended use of proceeds.
Covered exempted transactions trigger filing requirements when a single offer/sale is at least $25,000,000, or when an issuer’s covered exempted transactions aggregate at least $50,000,000 in the prior 12 months.
The SEC must publish: (a) annual aggregated reports listing covered advisers that disclosed any private‑fund assets in countries of concern and the percentage exposure, and (b) quarterly public reports of issuer filings for specified issuers incorporated in, tied to, or intending to invest in countries of concern.
Section-by-Section Breakdown
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New adviser reporting obligation for private‑fund assets in countries of concern
This provision inserts a new subsection into Section 204 requiring covered investment advisers to file an annual report with the SEC that states the total private‑fund assets ‘‘in’’ countries of concern, broken down by percentage per country. The practical import is twofold: advisers must collect portfolio‑level and underlying‑entity data sufficient to map assets to jurisdictions, and they must coordinate with related persons to aggregate private‑fund AUM for the $150 million threshold. Compliance teams will need to adopt entity‑level due diligence criteria to determine whether an investee entity’s capital, physical presence, or sales pattern ties it to a country of concern.
Who and what counts: country of concern, private fund asset, related person
The bill borrows the term “country of concern” from 10 U.S.C. 4872(f) (the ‘covered nation’ definition) but also permits the SEC, working with State and Treasury, to treat jurisdictions under the political or legal control of a covered nation as countries of concern. The term “private fund asset” is asset‑level and attributable to private funds advised by the adviser; “related person” refers to the Form PF‑type definition in 17 CFR 279.1. That linkage signals advisers will need granular reporting systems rather than coarse fund‑level tallies.
How the SEC decides whether an asset is ‘in’ a country of concern
The bill instructs the SEC to use objective indicia when deciding whether an asset is associated with a country of concern: capital invested in an entity with a physical presence or employees in that country, a plurality of sales from that country, or the share of the entity’s assets and liabilities located there. These metrics matter because they define the boundary between offshore structures that merely pass capital and investments that have substantive economic or operational ties to a jurisdiction of concern.
Issuer filing rules for larger exempted transactions and SEC rulemaking authority
This new Exchange Act section requires issuers conducting covered exempted transactions to file detailed information with the SEC for large deals — defined by the $25M single‑deal and $50M aggregate thresholds. The provision enumerates required fields (identity, place of incorporation, links to consolidated entities in countries of concern, securities sold, beneficial owners, intended use of proceeds by country and industry, and the exemption relied upon). The SEC gets explicit authority to issue implementing rules, revise forms, and set conditions that can limit an issuer’s future access to exempted offerings if it fails to comply.
Delayed applicability for exempted‑transaction disclosures and quarterly public reports
The Exchange Act disclosures apply to covered exempted transactions occurring on or after one year after enactment — an express delay that gives market participants time to prepare. Separately, the SEC must publish quarterly reports that include filings by issuers incorporated in a country of concern, tied to consolidated entities with a plurality of assets or incorporation there, or that disclose plans to invest proceeds in a country of concern. That creates an ongoing public record tied to specific transactions and issuers, not just adviser‑level aggregation.
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Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- U.S. regulators (SEC, Treasury, State): Gains granular, standardized data on private‑fund and exempt‑transaction flows into jurisdictions the statute treats as national‑security risks, enabling risk analysis and coordinated policy action.
- Investors concerned about geopolitical exposure: Institutional and retail investors gain a clearer public picture of which advisers and issuers have capital tied to countries the statute flags, supporting portfolio risk assessment and stewardship decisions.
- Compliance, audit, and legal service providers: Firms that provide due diligence, advisory, and reporting services will see new demand for systems, attestations, and counsel to map assets to jurisdictions of concern.
- Market transparency advocates and national‑security stakeholders: They obtain public reporting that was previously limited in the private‑markets and exempt‑offerings space, improving accountability for cross‑border capital flows.
Who Bears the Cost
- Covered investment advisers and private funds: Must build or expand systems to trace asset‑level exposures, aggregate related‑person AUM, and produce annual reports — with ongoing operational and personnel costs.
- Issuers relying on exempted transactions (especially foreign or cross‑border issuers): Face new filing obligations for larger deals, increased disclosure of beneficial owners and intended use of proceeds, and potential restrictions if noncompliant.
- Placement agents, law firms, and underwriters: Increase diligence burdens and legal risk when structuring exempt offerings to ensure filings meet the new requirements and to advise on potential liabilities.
- The SEC: Administrative and IT burden to collect, aggregate, publish, and vet detailed filings and to promulgate implementing rules; the agency may need additional resources to execute the mandated public reporting and enforcement.
Key Issues
The Core Tension
The core dilemma: increase transparency over private capital linked to geopolitical adversaries to protect national‑security interests, while avoiding undue damage to capital formation, legitimate private‑market activity, and commercially sensitive confidentiality — a choice between revealing risk (and potentially discouraging investment) and preserving market efficiency and privacy.
The bill trades a step increase in transparency for a set of practical and legal complications. First, the operational definition of when an asset or issuer is ‘in’ a country of concern relies on tests — physical presence, plurality of sales, proportion of assets/liabilities — that will be fact‑intensive and subject to interpretive disputes.
Advisers and issuers can be expected to litigate borderline cases or restructure holdings (e.g., via holding companies, transfer pricing, or jurisdictional shifts) to avoid reporting. Second, the bill reaches exempt transactions specifically chosen historically for limited disclosure; forcing detailed filings risks chilling legitimate capital formation or driving deals to jurisdictions and intermediaries that sit outside SEC jurisdiction.
That dynamic could push activity into less transparent corners of the market.
There are also coordination and classification risks. The bill anchors ‘‘country of concern’’ to 10 U.S.C. 4872(f) but gives the SEC discretion, in consultation with State and Treasury, to expand the list — potentially politicizing what is nominally an accounting exercise.
The Exchange Act filing requirement includes beneficial‑ownership disclosure and an industry‑by‑country breakdown of intended use of proceeds; issuers will claim commercial sensitivity and confidentiality, raising questions about what the SEC will redact in public reports and how trade secrets are protected. Finally, enforcement will depend on the SEC’s capacity to review high volumes of filings and on its rulemaking choices about materiality, timing, and remedies — all areas that could materially affect how burdensome the regime is in practice.
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