1. Short title This Act may be cited as the No China in Index Funds Act . 2. Prohibition (a) In general An index fund may not invest in a Chinese company. (b) Divestment period safe harbor With respect to an index fund with an investment in a Chinese company on the date of enactment of this Act, subsection (a) shall not apply to such investment during the 180-day period beginning on the date of enactment of this Act. (c) Civil penalty (1) In general Any person who violates this section shall be subject to a civil penalty in an amount not to exceed the greater of— (A) $250,000; or (B) an amount that is twice the amount of the transaction that is the basis of the violation with respect to which the penalty is imposed. (2) Amount of a transaction defined For purposes of paragraph (1)(B), the term “amount of a transaction” means— (A) with respect to a purchase that violates this section, the purchase price; and (B) with respect to the holding of an investment that violates this section, the fair market value of the investment at the time of the violation. (d) Rulemaking The Securities and Exchange Commission may issue such rules as may be necessary to carry out this section. (e) Definitions In this section: (1) Chinese company The term Chinese company means a company— (A) incorporated or otherwise organized in China; (B) that has a majority of its assets or employees located in China; (C) owned by, controlled by, or subject to the jurisdiction or direction of the government of the People’s Republic of China; (D) where a majority of the company’s value depends on the revenues, profits, market capitalization, assets, or the value of a security (including options to purchase or sell) of a company described under subparagraph (A), (B), or (C), as determined by the Securities and Exchange Commission