Joint hearings with the House Select Committee on the Strategic Competition to examine financial aggression, focusing on how the Chinese Communist Party exploits American retirees and undermines national security.

1[Senate Hearing 119-80]2[From the U.S. Government Publishing Office]34                                                         S. Hrg. 119-8056                     FINANCIAL AGGRESSION: HOW THE7                    CHINESE COMMUNIST PARTY EXPLOITS8                    AMERICAN RETIREES AND UNDERMINES9                           NATIONAL SECURITY1011=======================================================================1213                              JOINT HEARING1415                               BEFORE THE1617                       SPECIAL COMMITTEE ON AGING1819                                AND THE2021                       U.S. HOUSE SELECT COMMITTEE ON22                         THE CHINESE COMMUNIST PARTY23                          UNITED STATES SENATE2425                    ONE HUNDRED NINETEENTH CONGRESS2627                              FIRST SESSION2829                               __________3031                             WASHINGTON, DC3233                               __________3435                             APRIL 9, 20253637                               __________3839                           Serial No. 119-064041         Printed for the use of the Special Committee on Aging4243[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]4445        Available via the World Wide Web: http://www.govinfo.gov4647                                __________4849                   U.S. GOVERNMENT PUBLISHING OFFICE5060-494 PDF                  WASHINGTON : 20255152-----------------------------------------------------------------------------------5354                       SPECIAL COMMITTEE ON AGING5556                     RICK SCOTT, Florida, Chairman5758DAVE McCORMICK, Pennsylvania         KIRSTEN E. GILLIBRAND, New York59JIM JUSTICE, West Virginia           ELIZABETH WARREN, Massachusetts60TOMMY TUBERVILLE, Alabama            MARK KELLY, Arizona61RON JOHNSON, Wisconsin               RAPHAEL WARNOCK, Georgia62ASHLEY MOODY, Florida                ANDY KIM, New Jersey63JON HUSTED, Ohio                     ANGELA ALSOBROOKS, Maryland64                              ----------65                McKinley Lewis, Majority Staff Director66                Claire Descamps, Minority Staff Director6768       U.S. HOUSE SELECT COMMITTEE ON THE CHINESE COMMUNIST PARTY6970                  JOHN R. MOOLENAAR Michigan, Chairman7172ROBERT J. WITTMAN, Virginia          RAJA KRISHNAMOORTHI, Illinois,73ANDY BARR, Kentucky                      Ranking Member74DAN NEWHOUSE, Washington             KATHY CASTOR, Florida75DARIN LAHOOD, Illinois               ANDRE CARSON, Indiana76NEAL P. DUNN, Florida                SETH MOULTON, Massachusettes77DUSTY JOHNSON, South Dakota          RO KHANNA, California78ASHLEY HINSON, Iowa                  MIKIE SHERRILL, New Jersey79CARLOS A. GIMENEZ, Florida           HALEY M. STEVENS, Michigan80GUS M. BILIRAKIS, Florida            RITCHIE TORRES, New York81YOUNG KIM, California                SHONTEL M. BROWN, Ohio82NATHAN MORAN, Texas                  GREG STANTON, Arizona83ZACHARY NUNN, Iowa                   JILL N. TOKUDA, Hawaii84                              ----------85                  Dave Hanke, Majority Staff Director86                Jason Rodriguez, Minority Staff Director8788                         C  O  N  T  E  N  T  S8990                              ----------9192                                                                   Page9394Opening Statement of Senator Rick Scott, Chairman, Special95  Committee on Aging.............................................     196Opening Statement of John R. Moolenaar, Chairman, Select97  Committee on the Chinese Communist Party.......................     398Opening Statement of Senator Kirsten E. Gillibrand, Ranking99  Member, Special Committee on Aging.............................     4100Opening Statement of Raja Krishnamoorthi, Ranking Member, Select101  Committee on the Chinese Communist Party.......................     5102103                           PANEL OF WITNESSES104105Kevin O'Leary, Chairman and CEO, O'Leary Ventures, Miami, Florida     7106Christopher Iacovella, President and CEO, American Securities107  Association, Tampa, Florida....................................     8108Brady Finta, Founder, National Elder Fraud Coordination Center,109  San Diego, California..........................................    10110111                                APPENDIX112                      Prepared Witness Statements113114Kevin O'Leary, Chairman and CEO, O'Leary Ventures, Miami, Florida    52115Christopher Iacovella, President and CEO, American Securities116  Association, Tampa, Florida....................................    55117Brady Finta, Founder, National Elder Fraud Coordination Center,118  San Diego, California..........................................    64119120                        Questions for the Record121122Christopher Iacovella, President and CEO, American Securities123  Association, Tampa, Florida....................................    68124Brady Finta, Founder, National Elder Fraud Coordination Center,125  San Diego, California..........................................    69126127                       Statements for the Record128129Senator Rick Scott Letter to SEC Nominee.........................    74130131                     FINANCIAL AGGRESSION: HOW THE132                    CHINESE COMMUNIST PARTY EXPLOITS133                    AMERICAN RETIREES AND UNDERMINES134                           NATIONAL SECURITY135136                              ----------137138                        Wednesday, April 9, 2025139140                                        U.S. Senate141                                 Special Committee on Aging142                                                    Washington, DC.143    The Committee met, pursuant to notice, at 2:30 p.m., Room144106, Dirksen Senate Office Building, Hon. Rick Scott, Chairman145of the Committee, presiding.146    Senators Present: Senator Scott, McCormick, Justice,147Johnson, Moody, Husted, Gillibrand, and Kim.148    Represenatives Present: Representative Moolenaar, Barr,149LaHood, Hinson, Bilirakis, Krishnamoorthi, Castor, Stevens,150Brown, Stanton, Tokuda151152                 OPENING STATEMENT OF SENATOR153        RICK SCOTT, CHAIRMAN, SPECIAL COMMITTEE ON AGING154155    The Chairman. The hearing will now come to order. First,156let me welcome our colleagues from the U.S. House Select157Committee on the Chinese Communist Party. I want to thank158Chairman Moolenaar and Ranking Member Krishnamoorthi for159joining myself and Ranking Member Gillibrand for this160incredibly important hearing. The U.S. Senate's Special161Committee on Aging is charged with examining any and all162matters pertaining to the problems and opportunities of older163people.164    Our jurisdiction is purposely broad because we want what165most impacts aging Americans today could be radically different166from what impacts the seniors of future generations. In fact,167if we do our jobs here, the problems we worry about today will168be solved long before any of our grandchildren have reached169their senior years.170    It is in that spirit that we come together with our171colleagues from the U.S. House China Select Committee for a172joint hearing focused on the threats that Americans face when173their retirement savings are invested in Communist China. Let's174make something very clear about why we are here today.175    The government of China, Communist China, has chosen to be176America's enemy. It is simple. I wish it wasn't true.177Unfortunately, it is. Unfortunately, that is not a problem that178only our military intelligence community has to worry about.179The government of Communist China has shown again and again180that it will do anything to hurt America and weaken our place181in the world, including going after our citizens, and targeting182the retirements, and hard earned savings of America's seniors.183    I want to be clear about the threat here. If you have your184retirement invested in anything that is controlled by or under185the jurisdiction of the Chinese Communist Party, you are at186risk of losing every dollar, and this could happen overnight. I187know this may sound extreme to some, but here is what we know.188    There is a clear risk to American investments in Communist189China because the Chinese Communist Party, which does nothing190but lie, cheat, and steal, controls every business in its191country. There is no real private industry in Communist China.192The CCP controls everything. Choosing to invest in Communist193China threatens our national security and jeopardizes the194retirement savings of hardworking Americans.195    During today's hearing, we will talk about the threats196posed to the individual retirements of American seniors, the197scams run by the CCP, and the national security risk of198investing in Communist China, but as the Chairman of the Senate199Aging Committee, my focus is on our seniors and using today's200hearing, in our partnership with our colleagues in the Senate201and the House, to protect seniors from known bad actors like202the Chinese Communist Party, and make sure they know where203their dollars are being invested and why they need to get the204heck out of Chinese investments today.205    I bet many in this room have retirement accounts and206investments, but they may not even know what companies these207investment dollars are being invested in. This is a huge208problem. Too often Washington fails to fix problems, not209because it lacks authority to do so, but because of intentional210or incompetent failure to enforce existing laws and rules.211    This is true in every part of government, and it is212dangerously true when it comes to holding foreign companies and213governments accountable. In 2020, the Holding Foreign Companies214Accountability--Accountable Act was signed into law by215President Trump, which mandated that if companies in Communist216China did not comply with U.S. auditing standards for three217consecutive years, they must--not maybe--they must be delisted218and banned from trading on American exchanges.219    This law was amended in 2022, reducing the consecutive220years of non-compliance from three years to two years, but221unfortunately, under the last Administration, the SEC failed to222enforce this law, and today many Chinese companies, including223Yum China, Alibaba, and Baidu are still listed on American224exchanges in clear violation of U.S. law.225    This is a perfect example of why your money is not safe226when investing companies tied to Communist China. I plan on227holding the SEC accountable to enforce the law, and I hope to228work with Chairman Moolenaar, Ranking Member Gillibrand, and229Ranking Member Krishnamoorthi to make sure laws intended to230protect Americans from threats posed by Communist China are231fully enforced.232    We are also fighting to fill gaps in current law and233strengthen U.S. enforcement authority with multiple pieces of234legislation that will hold Communist China accountable. These235bills will take the necessary steps to secure markets, protect236consumers, demand transparency and accountability, and ensure237investors, especially seniors who are the most vulnerable, are238protected. We need to stop putting Americans' retirement at239risk with investments in the corrupt businesses and practices240of Communist China.241    I believe the new Chairman of the SEC will--and I know he242is committed to me that he is going to enforce this act. Stop243putting Americans' retirements at risk due to their244involvement. We are propping up the agenda of the CCP.245    Americans work way too hard to have their financial246security destroyed by Communist China. Today, we are going to247learn more about this problem and come up with a policy plan to248stop it before it is too late, and Americans' retirement249stability is wiped out by Communist China. I would now like to250recognize Chairman Moolenaar for his opening statement.251252       OPENING STATEMENT OF JOHN R. MOOLENAAR, CHAIRMAN,253            COMMITTEE ON THE CHINESE COMMUNIST PARTY254255    Chairman Moolenaar. Thank you, Chairman Scott, and thank256you for hosting us today. I just appreciate all the colleagues257from the House and the Senate for being part of this. This is a258unique hearing, not only because it is bi-cameral, but because259it reflects growing momentum in Congress to confront the260growing risks to American investors and our national security.261    Let me start with a simple point, the future of American262capital markets and our national security are deeply connected.263They are inseparable. For decades, the United States has led264the world in innovation and investment, but today that265leadership is being challenged, not just by market forces, but266by a foreign adversary, the Chinese Communist Party.267    The CCP is actively using its financial system and state268controlled companies to infiltrate American capital markets,269and while some might see that as just another investment risk,270it is much more than that.271    We have already seen the damage. In 2021, the CCP abruptly272imposed sweeping regulations on China's private education273sector, banning profit making, foreign capital, and public274listings. That decision wiped out billions of dollars in U.S.275investments almost overnight, devastating major companies like276TAL Education and New Oriental. It was a wakeup call, not just277for what can happen in a single sector, but for the broader278reality that when the CCP maintains ultimate control, no279company is truly independent.280    I look forward to the hearing from today from the witnesses281on how the CCP control creates systemic risk for U.S. investors282regardless of industry. Mr. O'Leary has pointed out something283in his written testimony equally concerning, the golden share284the CCP holds in many Chinese companies. On paper, these firms285may look like private enterprises, but the reality is that286party influence runs deep.287    When political control overrides fiduciary responsibility,288even the smartest investor can be left in a losing position.289That issue has also shaped policy decisions here in Washington.290The TikTok Bill, for example, was crafted to require full291divestiture of CCP control because anything less would leave292the door open to the same risks.293    We have seen this at play time and time again. Congress has294acted before to safeguard American investors through the Public295Company Accounting Oversight Board and the Holding Foreign296Companies Accountability Act, but the reality is this, the CCPs297opaque regulatory regime, its disregard for the rule of law,298and its willingness to use financial tools for political gain299present ongoing and significant dangers to American savings.300    The question becomes this, what more can Congress do to301protect U.S. investors from companies effectively controlled by302a hostile regime? That is what today is about. We will hear303from experts who understand how the CCP uses its influence to304mask risk, suppress transparency, and undermine shareholder305rights, and we will look at what happens when American money306flows into companies tied to surveillance, censorship, military307buildup, even human trafficking.308    Americans deserve to know whether their capital is being309used to fuel the very threats we are trying to guard against,310and they trust us to take action to keep their investments311safe. This hearing isn't just the end of the conversation, it312is just the beginning. Thank you, Mr. Chairman, and I look313forward to today's discussion.314    The Chairman. Thank you, Chairman Moolenaar. Now I would315like to recognize Ranking Member Gillibrand for her opening316statement.317318      OPENING STATEMENT OF SENATOR KIRSTEN E. GILLIBRAND,319           RANKING MEMBER, SPECIAL COMMITTEE ON AGING320321    Senator Gillibrand. Thank you, Chairman. It is a delight to322be here. Thank you to our witnesses. This is a very hot topic323in New York. I want to thank my Republican House members and my324Democratic House members for joining us. This is so much fun.325We should do this more often. I am grateful you are here, and I326am sure all of us have been hearing from our seniors quite a327bit.328    This has been a very tough time for seniors. The stock329market's ups and downs, losing over $1 trillion of wealth over330the last few weeks. It is very, anxiety provoking for so many331seniors. They worry about the fact that when they go to the332Social Security Administration, they can't make a phone call to333them.334    Their phone calls aren't returned. They are on hold for335five hours. Multiple stories. Problems with getting online336access. Just the list of worries goes on, but the one issue337that has provoked and upset and concerned my seniors the most338over the many, many years that I have been on this Committee is339these online scams. The scams that are coming out of criminal340networks worldwide are unbelievable, are heartbreaking, are341horrific.342    Highly complex, international criminal networks are going343after our seniors because they know they are soft targets. They344know that they are worth trillions of dollars, and if they can345get underneath their skin, if they can get them to click on the346right button, if they can get them to open a certain piece of347mail, if they can get them on the phone and pretend they are348their grandchild, they will be able to steal thousands and349thousands of dollars.350    The PRC, there is criminal networks in China that are so351sophisticated. That know this is where they can make millions352and millions of dollars, and so, I think this hearing is353essential. I am so grateful that we have bipartisan, bicameral354support for figuring out how can we help law enforcement crack355down more effectively on these international criminal networks356that are targeting our seniors.357    The FBI indicates that seniors are disproportionately358affected by frauds and scams with over $3.4 billion, b with a359b, billion with a b in scam related losses for individuals 60360and over in 2023 alone, so we must understand the scope of this361problem, and when I have talked to my local law enforcement and362asked them, what can you do, they basically have a tough time363crossing borders and crossing countries to be able to actually364get to the bottom of these scams and these criminal networks.365    They need resources, they need support. They need far more366help. We know that these PRC organized crime networks are367operating in Southeast Asia, they are operating in countries368around the globe, and they are able to create massive scams.369One of the ones that, Mr. Krishnamoorthi and I were talking370about was--I didn't ever hear this term, the pig butchering371scam.372    They are looking at our seniors like animals that they are373fattening for slaughter. They will scoop them into a scam, get374them to trust them, get them to get more and more access to375their accounts, to the point where they feel like they can get376all of the money and then they steal it. That is a disgrace.377That is disgusting. That is something that we have to do378something about.379    The GAO just issued a report. We asked for this report on--380that we requested, and it outlines the actions of the Federal381Government and what they can do to improve complaint reporting,382consumer education, and federal coordination to counter scams.383That is just the beginning of what we should be doing, but I384just want to thank you, Mr. Chairman, for caring to have this385hearing.386    I want to thank the Republicans and Democrats from the387House and Senate for being here and shining a light on this388outrage that is happening in our country that we have done389insufficient amounts about. We need more tools. We need more390resources. We need a laser-like focus on how we can make our391seniors whole.392    The Chairman. Thank you Ranking Member Gillibrand. Now, we393would like to hear from Ranking Member Krishnamoorthi.394395           OPENING STATEMENT OF RAJA KRISHNAMOORTHI,396397                RANKING MEMBER, COMMITTEE ON THE398399                    CHINESE COMMUNIST PARTY400401    Representative Krishnamoorthi. Thank you, Chair Scott,402thank you, Chair Moolenaar, thank you, Ranking Member403Gillibrand, for convening us today. I would like to address404three things. First, a scamming practice called pig butchering,405which Senator Gillibrand just referenced. Second, the impact of406China backed organized crime syndicates' scams on older407Americans, and third, China's culpability in these scams.408    First, pig butchering. Pig butchering is a scam named for409the way it lures victims in, fattens them up, gains their410trust, and then drains their finances. In many cases, a scammer411poses as a family member or friend, urgently in need of money.412In others, a scammer uses fake identities to get romantically413involved with unsuspecting victims such as older adults.414    Once the victim's trust is earned, the scammer asks for415money or suggests investing through a fake app that drains the416victim's finances. Take this story. If you look at the video417from just outside my district of a woman who lost almost one418million to a scammer using pig butchering.419    Now my second point, this is not just a financial issue. It420is a human rights issue and a national security concern.421According to the U.S. Institute of Peace, cyber scamming in422Southeast Asia, mainly Burma and Cambodia, is driven by Chinese423gangs and generates almost $44 billion annually.424    Weak law enforcement and corruption in this region have425also allowed gangs to traffic people from 70 countries,426including Americans, into this illegal scamming industry. As427USIP has pointed out, the scamming industry is so vast and so428lucrative that it now parallels fentanyl as one of the top429threats posed by Chinese criminal networks to the United430States.431    My staff actually received a scam text this week, I am not432joking, which we can see here, and it starts with a simple433hello. Many of us just delete or not respond when we get texts434like this one. In this case though, we decided to respond to435better understand how these scams work. Within minutes, we436received a WhatsApp link and pictures of a woman who said her437name is Daisy.438    Here she is, and she says, these are all my travel photos439from different countries. Every time I travel, I can meet all440kinds of people and things. Daisy then goes on to compliment us441saying, you are welcome. You give me--you give me the442impression of a kind, friendly, polite, and well-mannered man.443I can feel the warmth when chatting with you. Over the course444of just seven hours, our dear friend Daisy asked for an445investment and my staffer asked how much she needs.446    She responded, approximate investment of $10 million to $30447million, money that Daisy would happily walk away with. It is448dangerous scams like these that are preying on older Americans.449Third, and my final point, there is more to the story than just450Chinese gangs operating in the shadows. These groups, these451gangs directly tied to the Chinese Communist Party.452    This is Wan Kuok-koi, AKA broken tooth, a Chinese453businessman, or more accurately a mafia boss, who is behind a454scam compound tied to the CCP. Broken tooth's public motto is,455"I used to fight for the triads and now I fight for the456Communist Party." Another gentleman behind another scam city457seen here with a Burmese warlord is She Zhijiang. He is wanted458in China for financial crimes, but his ties to the CCP allowed459him to operate freely for years before being detained by Thai460authorities.461    China now seems to be taking some steps to reckon with this462issue, but it is too little, too late. Like the fentanyl issue,463the CCP turned a blind eye and has allowed this to happen. The464CCP must recognize its role in allowing gang bosses and scam465centers to absolutely run rampant.466    The financial and human cost of these scams is enormous,467and we must act now to protect older Americans. Thank you, and468I yield back.469    The Chairman. Thank you, Ranking Member. Now, I would like470to welcome our witnesses here today. Before I introduce our471first witness, I would like to ask each of you to be mindful of472our limited time together today and keep opening statements to473five minutes. First, I would like to welcome Kevin O'Leary.474    Mr. O'Leary is also known as Mr. Wonderful. He is a475business leader, investor, and known to millions of Americans476for his role in the hit TV show, Shark Tank. Most important to477today's hearing, Mr. O'Leary understands the risks and threats478posed by Communist China and why investing your retirement479there is a bad deal for any Americans.480    Even though he was born in Canada, I am proud that he now481calls the Sunshine State his home. Mr. O'Leary, thank you for482being here today. You may begin your testimony.483484STATEMENT OF KEVIN O'LEARY, CHAIRMAN AND CEO, O'LEARY VENTURES,485                         MIAMI, FLORIDA486487    Mr. O'Leary. Chairman Scott, Moolenaar, Ranking Members488Gillibrand and Krishna--I am going to get this right--489Krishnamoorthi, members of the Senate Special Committee on490Aging, and the House Select Committee on the Chinese Communist491Party, thank you for inviting me to participate in today's492important hearing.493    I want to use my opening statement to shine a light on an494issue that impacts millions of American investors, many of whom495have invested their retirement funds in the equity markets. The496threats posed by the Chinese Communist Party I will discuss497today impact anyone and everyone like me who has tried to do498business in China, everyone that invests in the stock market,499anyone that invests in passive investment vehicles like500international index funds or mutual funds, any retail investor501that invests in Chinese companies, anyone who invests502internationally in emerging markets like China, and everyone503with a 401k plan or pension invested in international index504funds. I have nothing against the Chinese people.505    Their contributions to science and art over the millennia506are well documented. It is their government I take issue with.507In my opinion, since joining the WTO in 2000, the Chinese508government has never played by its rules. This has led to the509CCP to passing various laws in the realm of cybersecurity,510espionage, intelligence, and beyond, and other mechanisms to511control its corporations, industries, and business512partnerships, all to the detriment of U.S. investors.513    This is not a new phenomenon. It has been part of the long514game China has been playing for decades. Let me just elaborate515briefly on a few reasons why the time for us to address this516matter is today. In its desire to reduce state run companies517and their holdings in them, the Chinese government divested518itself from them.519    However, in return for taking a one percent share in the520company, the government is granted a seat on the board, voting521power and influence over all business decisions. It is522effectively a super voting right. This is the golden share that523Xi is using today to control the potential sale of TikTok. If524China maintaining control of companies wasn't bad enough for525investors, China prevents foreigners from owning Chinese526companies.527    Instead, they are cleverly exploiting the U.S. financial528system creation of variable interest entities, VIEs, to529approximate the ownership of corporate shares. If you own stock530in a company like Tencent, Alibaba, or ICBC, you don't actually531own stock in a company. You own a share of a contract of532something in the Cayman Islands that is trying to approximate533stock ownership.534    The U.S. has given China preferential treatment for over a535decade through its own special memorandum of understanding that536governs accounting standards and oversight. This sweetheart537deal with the Public Accounting Oversight Board, the PCAOB, has538allowed China to continue to game the U.S. financial system via539their special treatment that is not afforded to other540countries--even our allies.541    This is a completely unbalanced and non-reciprocal542situation, and why do we allow this? How can this be viewed in543any way as fair to American investors? There should be complete544parity between the U.S. and China. I believe Congress should545act to delist CCP affiliated companies until there is a parody546of treatment for Western businesses in China. If we can't own547stocks in their country, they should not be allowed to own548stocks in the U.S.549    Unless businesses can operate in China with the same550freedoms that Chinese businesses have here, we should not let551their businesses operate in the U.S. We should exit China's552marketplace until the CCP makes significant reforms. We should553demand that all Chinese companies engage in U.S. markets,554comply with U.S. accounting standards. For decades across555multiple Administrations, we have dismissed--we have discussed556leveling the playing field with China.557    Instead, the situation has only gotten worse. Make no558mistake, I want to do business in China and so do millions of559other investors and companies, but we want a reciprocal560ecosystem in place that is transparent where all parties play561by the rules mutually agreed upon. I want access to the Chinese562legal system, so trade and IP grievances can be litigated and563resolved. The Chinese enjoy these rights in the U.S. Why do we564not have them in China?565    Lately, there has been a lot of rhetoric about--during566negotiations globally, on who "holds the cards." The U.S. is567still the world's largest markets, supported by the world's568largest economy, under the rule of democratic law. That is why569so much of the world's capital is invested here.570    That is a lot of leverage. Let's fix this Chinese problem571while we still hold the cards. I look forward to a robust572conversation today and answering any questions you may have.573Thank you.574    The Chairman. Thank you, Mr. O'Leary. Now I would like to575welcome Christopher Iacovella. He is the President and CEO of576the American Securities Association.577    He serves as the leading voice for financial services578policy. He has worked as Special Counsel and Policy Advisor to579Commissioner Scott Malia at the U.S. Commodity Futures Trade580Commission. Thank you for being here, and I look forward to581hearing your testimony.582583         STATEMENT OF CHRISTOPHER IACOVELLA, PRESIDENT584585                  AND CEO, AMERICAN SECURITIES586587                  ASSOCIATION, TAMPA, FLORIDA588589    Mr. Iacovella. Thank you. I am grateful to the Chairs,590Ranking Members, and members of each committee for the591opportunity to testify today. My name is Christopher Iacovella592and I am the President and CEO of the American Securities593Association. Today, I will discuss the risk the CCP poses to594American investors and to our national security.595    While it was widely believed that the free flow of global596capital to communist China would liberalize its political and597economic systems, that is not what happened. In fact, the598opposite occurred. Beijing used the openness of the599international economic system to exert geopolitical leverage600over the U.S. and our allies.601    Rather than liberalize, the CCP has been engaged in a602multi-decade, multifaceted political, economic, and military603strategy to achieve "the great rejuvenation of the Chinese604nation." The goal is to create a new world order through605economic coercion and manipulation while avoiding a hot war.606This has left the world less open and more authoritarian. To607implement this strategy, the CCP needed capital, and that is608where Wall Street comes in.609    For over two decades, Beijing has used Wall Street to610penetrate our capital markets and fund its rise. In exchange,611Wall Street received huge fees and access to the Chinese612market. It is this quid pro quo that directly threatens613America's economic and national security. The partnership works614like this.615    First, Wall Street spins a narrative about emerging market616returns and the China opportunity. Then it sells Chinese617companies to American investors on our exchanges. After the618IPO, the money goes to China and Wall Street continues propping619up these companies by putting them in stock index funds,620touting them in financial media, and lobbying Washington to621maintain the status quo.622    To raise money on exchanges, companies used a novel legal623scheme called the variable interest entity structure. This624scheme allows a Cayman Island shell company that contracts with625the mainland Chinese company to list its shares on our626exchanges. American investors have no equity or voting rights627in the shares of the Chinese company and very little legal628protection. We join the Select Committee in asking Congress to629end this legal fiction and delist every VIE from the exchanges.630    After the VIE scheme was scrutinized, the CCP needed a way631for Americans to buy mainland Chinese companies listed on632mainland Chinese stock exchanges, so Wall Street used what I633call the passive index loophole, which allows these companies634to be included in international emerging market and China635specific index funds like A-shares.636    This loophole has funneled billions of dollars in American637savings to Chinese companies, while allowing them to avoid all638of the disclosure financial reporting and audit requirements639American companies must comply with to sell stock to American640investors. As the Select Committee found, this loophole also641exposes American investors to Enron like frauds, Chinese642military companies, and companies that support egregious human643rights abuses.644    It must be closed. The Select Committee also found that645numerous Chinese companies on our exchanges and index funds are646on government prohibition lists. A company goes on one of these647lists if it is a threat to our national security, foreign648policy, or economic interests.649    There is no policy basis for any company on these lists to650access our markets, and we recommend that an entity placed on651one government list should be placed on all lists and652automatically allow the Treasury Secretary to de-list and de-653index these companies from our public capital markets.654    Because China operates as a party state, this raises655another important policy question. How does the CCP use656American money? Unfortunately, American investor money is used657to fund the emission of more greenhouse gases than every658developed country combined. PLA weapons systems.659    A cyber army that relentlessly attacks us. Subsidies for660Chinese companies who dump their goods into our market, and661sickening human rights abuses. The people of America want this662to stop, but unless Congress makes the funding of the CCP663illegal, it won't. The final issue I want to talk about today664is fraud, which has gone from an individual criminal act to a665lucrative business opportunity funded by state-sponsored actors666across the globe and in China.667    Americans lost $158 billion in 2023 and are estimated to668lose billions more as generative AI fraud evolves. Every day,669ASA members face scams from China that target their employees,670their firms, and their customers, and while millions are spent671trying to stop this, Americans who have been scammed know that672if they can't get their money back before it goes to China,673then it is gone.674    The government and the private sector have an obligation to675work together to stop this avalanche of fraud from continuing676to harm Americans. To conclude, communist China doesn't play by677the rules, and it is time for us to revoke the privilege we678gave them to play in our game. This isn't a left, right issue679or a red state, blue state issue.680    It is an American issue and now we need a United Congress681to take action to protect this country and our people from the682CCP. Thank you, and I am happy to take your questions.683    The Chairman. Thank you. Now I would like to introduce our684next witness, Brady Finta. Mr. Finta is a retired FBI agent,685the Founder of the National Elder Fraud Justice Coordination686Center. Through his work as an FBI agent, Mr. Finta oversaw687cases regarding international scam rings targeting older688Americans. You may begin. Thanks for being here.689690       STATEMENT OF BRADY FINTA, FOUNDER, NATIONAL ELDER691        FRAUD COORDINATION CENTER, SAN DIEGO, CALIFORNIA692693    Mr. Finta. Good afternoon. As you said, my name is Brady694Finta, the Founder of the National Elder Fraud Coordination695Center, and I am honored to be here. I believe the scale of696fraud against America's elders has grown to epidemic697proportions and it is time that we as a country treat it as698such with a proportionate response.699    I spent 23 years as an FBI agent, predominantly700investigating and supervising transnational organized crime701cases, and when my assignment exposed me to elder fraud, I was702comfortable as the cases are essentially transnational elder--I703am sorry, transnational organized crime under a different name.704    What I was not prepared for was the volume. Just in my705limited territory of San Diego County, I was inundated with706elder fraud complaints without adequate resources to fight the707threat. No one has those level of resources. Even after708standing up the FBI's Elder Justice Task Force alongside the709U.S. Attorney's Office and the San Diego District Attorney's710Office, and bringing forward our very first successful RICO711prosecution, our ability to make a dent in the crime problem712was minimal, particularly as we were only able to address less713than one percent of the leads.714    Based on my experience, I believe only about 10 to 15715percent of the elder fraud victims ever report the crimes716against them. Even with this low percentage, the volume of717complaints is still too large to investigate. Elder fraud and718scam cases are not easy. They are incredibly time consuming.719They literally span the globe, combining organized crime groups720in foreign countries with regional organizers, co-conspirators,721and mules in the United States. Laundering the proceeds of the722crime runs the gamut, from cash to gift cards, to wire723transfers, to digital currencies.724    For the most part, the complexity of these cases combined725with their innate jurisdictional challenges and resource726requirements limit their investigation and prosecution to727federal entities, further straining those resources.728    In one just very typical case I oversaw, we had scammers in729India working with regional organizers in the Bahamas, mules in730the Dominican Republic and the United States, and Canadian and731Chinese organized criminals laundering the proceeds. The732international natures of these scams make them extremely733difficult for law enforcement and prosecutors alike to hold734those criminals accountable.735    It gets more difficult when the country where the crime736ring is based is uncooperative. While I realize this hearing is737intended to focus mainly on China, I would like to emphasize738this is a larger and global issue, and we currently do not have739the resources to properly address it. This threat touches all740of us. I would venture to say everyone in this chamber has a741story of an acquaintance, a coworker, or a family member who742has been victimized. Both of my parents were victims. My mother743didn't want to tell me based on embarrassment and believing744that there was nothing anybody could do.745    There is always something we can do. The FTC estimates that746the annual losses to this scourge are approximately $61747billion, and the FBI statistics that show huge increase in748these complaints over the last few years further underscore749that the time is now for a more dramatic response--a whole of750society response. As a country, we have created national task751forces of state, local, and federal agencies to combat illegal752narcotics, gangs, child exploitation, and terrorism.753    Our parents and grandparents deserve nothing less. In754addition, we could make these elder justice task forces more755effective by supporting them with the power, speed, and agility756of the private sector. Beyond continuing education programs,757information sharing, and new preventative efforts, a true758public-private partnership, which combines law enforcement, and759the many robust anti-fraud efforts already in place in so many760companies across the United States could create real impact.761    This is the mission of the National Fraud Coordination762Center, to bring these efforts together, amplifying these763investigations with cross-sector data to elevate the most764impactful cases and speed up the process to allow for more of765them. Our founding members at AARP, and Amazon, Google, and766Walmart are dedicated to the idea of pooling these resources767together for this worthy cause.768    Our partnership with the National Cyber Forensics Training769Alliance offers the opportunity for hundreds of other companies770to do the same. I thank you for your time and attention on this771important issue, and I look forward to answering your772questions.773    The Chairman. All right. Thank you to the witnesses for774being here, and now we will go through--start asking some775questions. Let me start with Mr. O'Leary. Can you explain this776idea that Chinese companies--Americans can buy into or make an777investment in a Chinese company, and we have no idea whether778their financial statements are accurate because they don't have779an obligation like American companies do to comply with general780accepted and accounting principles, and our SEC has not781enforced rules--which would require any American company to782comply, but not--for whatever reason, Chinese companies don't783have to. What is the risk to an investor?784    Mr. O'Leary. No transparency. Regulations in the U.S., and785the regulatory environment, and the bodies that enforce it have786created the most successful capital markets on Earth. More than787half or almost 60 percent of the world's capital is invested788because of the rules put in place for transparency and789appellate courts and everything that makes these capital790markets work in the United States, and yet somehow--and I am791calling foul as an issuer of securities that is enforced by792these regulations that I abide by for obvious reasons and want793to--I want to be compliant. I also have to bear the escalating794costs each year, which are millions of dollars to be compliant.795Yet, I look right beside me on a listing, and I see a Chinese796company that is completely ignoring these regulations and797suffers no outcome at all. I mean, there is no consequences.798    I understood the law would allow--gave them 36 months for799compliance and then it was adjusted down to 24 months, and800still they are listed, and still, I have to compete with them801to raise capital and they don't even have to pay the compliance802costs. I mean, what is wrong with this picture? How can this803possibly be going on? I am above--I am so excited that finally804this is getting national focus.805    This is absolutely outrageous and unfair, and we are806letting them take this capital they raise in these markets, and807we can't do the same thing there. We can't litigate there. We808can't protect our IP there. They use the courts, the American809court system, to litigate my companies after they steal the IP810and knock the product off, and I can't do anything about it811except come here and say, wake up.812    Like, this has got to stop. It has got to stop, and they813have to pay the consequences. There has to be consequences. I814would be in a federal jail doing what they do in terms of not815being transparent on their quarterly statements. There is no816way this can go on.817    The Chairman. The Security Exchange Commission requires a818company that wants to be stocked to the public to provide819disclosure of anything that is material. On top of that, they820require them to give audited financial statements, right?821    Mr. O'Leary. Right.822    The Chairman. That is what you have to do, right?823    Mr. O'Leary. I also have to disclose if I have a super824preference share. It has to be disclosed that one individual825controls the entire outcome of the board and the company. Who826would want to invest in a company like that? Do you think I827could raise any money if I disclose that--I have a golden share828in my structure that only I can decide all outcomes on every829single issue. The board is irrelevant.830    That is basically what that share is. Could I even compete?831I bet you there are hundreds of companies that have not832disclosed that, listed in America today on the NASDAQ and the833NYSC. Why are they trading? I can't do that. How come they can?834They got to be--listen, if you think that is okay and you want835to invest in a company where one individual has a super golden836share, go ahead.837    The chances you go to zero are very high because that838person may not have any governance or any momentum or any839consideration of the rest of the shareholders. That is why we840don't allow this here, and that is why we are the most841successful capital market on Earth because if investors feel842confident there are no golden shares on the balance sheet,843because the board would enjoy time in a federal prison if they844tried that, and we don't do that to the Chinese and it has just845got to stop.846    The Chairman. Number one, they are not complying with SEC847rules. Number two, they are not complying with exchange rules,848and number three, anybody that has taken them public, all849right, they can't comply because they can't disclose anything850material because there is not enough information, right?851    Mr. O'Leary. Why wouldn't you put consequences on those852that facilitate this? I would love to pour boiling oil over my853competitors that are not being compliant. That is why we have854competitive markets.855    I know what the rules are. If I want to do a listing, I856want to raise capital, I want to do an RTO, whatever it is, I857know what the rules are, and I cannot be non-compliant. Yet, I858am competing with companies that go after that same dollar from859the investor that are totally opaque. That is just wrong.860    I am happy to come here and scream about it. Happy to do861that. I am happy that we are having this narrative.862    The Chairman. Thank you, Mr. O'Leary. Now, I will turn it863over to the Chairman, Moolenaar.864    Chairman Moolenaar. Thank you, Mr. Chairman. Mr. O'Leary,865if I could followup with you on some things. You know, we are866here to explore today the risky business of investing in867Chinese companies, and it is an area where you have some868experience as a potential purchaser of TikTok.869    TikTok, as you know, is one of the most prominent Chinese870companies on the planet, and when you were putting together871your TikTok bid, what sorts of national security and legal risk872were you most concerned about, and how did those risks affect873the bid that you constructed?874    Mr. O'Leary. The truth about TikTok is, and I am aware of875this and many others in the social media industry, and the876software and AI industries know this, TikTok is weapons grade877spyware, period. It is one of the best propaganda machines I878have ever seen.879    If you want evidence of it, go on in the last 24 hours and880look at the videos generated there through AI of overweight881Americans at sewing machines, even the President himself882depicted here, or over iPhone screwing in screws with the883message, let's Make America Great Again.884    I have never seen such blatant propaganda, and that is why885in this situation, this law was written, and it is very886specific. This is before the Supreme Court nine to zero ruling887about redefining what these laws said regarding the algorithm.888What it says is we cannot--if any interested syndicate that889wants to buy this, it cannot use the algorithm. That is the890plain language, and then further defined with higher resolution891on the top paragraphs of page five of the nine page ruling from892the Supreme Court, nine to zero, very definitive, no algorithm.893    Now, many syndicates have been formed with the idea of894leasing the code, leasing the algorithm, buying the algorithm,895fixing it, putting it on an American server. What everybody was896looking for in the capital markets was the definition of897whether this was even possible.898    Would you write an indemnification? Would you put that899indemnification in the Reconciliation Act and attempt to get 51900votes? Would you go back to Congress to change the law and get90160 votes to allow an indemnification for the buyer to survive902into the next Administration? Because the penalty is $5,000,903per 24 hours, per account.904    That is $80 plus billion dollars a quarter. Nobody is going905to do that unless they are indemnified, and I have understood906today from Senator Cotton, that is off the table. Now, we have907clarity. Whoever is going to buy TikTok is not going to buy the908algorithm, period. That is clear, and I think that is great909that you have done that because it makes the competition much--910much more in focus, and do I want TikTok to survive? Yes.911    I am an advocate, as you know, for small business in912America. Companies between five and 500 employees. A very913successful platform. Over seven million families make their914living on TikTok. It is the lowest customer acquisition cost915vehicle in America. It is a great competitive product when it916is used properly. I would love to be part of the syndicate that917buys it. There is no question about it.918    I am also an advocate for these small businesses because919they create 60 percent of jobs in America. They are the920American economy. I would like to see this product survive.921Happy to play by the rules, 100 percent.922    Chairman Moolenaar. Can I just followup with you, you923talked about the golden share, and I would like to hear a924little bit more about that. Relative to TikTok, does Xi Jinping925have a golden share in ByteDance?926    Mr. O'Leary. Ask yourself why, when we are talking about927buying TikTok, we are not talking about the shareholders of the928company that own it, called ByteDance. They seem to be929irrelevant in this negotiation. There is only one narrative930that matters. Every buyer knows this. What is Trump, President931Trump going to do with Xi on TikTok? 100 percent, he has a932golden share.933    There is no other way this deal is getting done. I think934that is the case for hundreds of companies that have raised935capital in the American markets. He will personally decide. You936may not like that. I certainly don't, but I respect it to be a937fact. I know I can't do this deal, or anybody can without his938decision on what the structure is going to be.939    The laws currently here allow for the Chinese to own up to94019.9 percent. This is a media company. These laws are already941in place. I am happy to work with this deal, as every syndicate942would be, as long as it is compliant, but does Xi have a golden943share? 100 percent. He alone will decide.944    Chairman Moolenaar. Thank you very much, and, with that, I945would like to call on Senator Gillibrand.946    Senator Gillibrand. Thank you very much, Mr. Chairman.947Appreciate you very much. For Mr. Finta, during your career as948an FBI agent, you worked on a case that uncovered a949multinational organized fraud ring that targeted elderly950victims in the United States. Your testimony notes that it is951extremely difficult for law enforcement and prosecutors to hold952these transnational actors accountable due to the lack of953coordination and resources.954    What do you think should be and could be done to combat and955investigate these frauds and scams that target our older956Americans that are perpetrated by these international criminal957networks?958    Mr. Finta. I appreciate the question, Senator. When I said959before there is something we can do, I genuinely and truly960believe that. We have amazing power here in the United States961and opportunity not just within law enforcement in our962government, but in our private sector.963    Truly, even during those transnational organized crime964cases, and pretty much every single one of them involved965criminal enterprises overseas with co-conspirators in the966United States, our private sector holds the data that we need967for that evidence, for the investigation, for the intelligence.968    Now, of course, it is available by subpoena. It is969available by a lot of hard work and a lot of agents coming970together over sometimes years to work these cases, which971essentially defeats us from getting a lot of progress against a972threat like that.973    Senator Gillibrand. Yes.974    Mr. Finta. Not enough cases. Not enough agents. Now, if we975got to the point--where we have in other instances. For976example, our JTTF, our Joint Terrorism Task Forces, where977state, local, federal agencies are working together with978representatives from the private sector to share information979into advance these cases to the point where they become980effective, and we can do more of them.981    The culmination of this across the country, if we had more982of these task forces, would inform those decisions that we are983trying to make overseas, right. We would have the intelligence984we need with more of those cases, with more of those arrests,985with more of that intelligence. It is definitely within our986grasp.987    Senator Gillibrand. You are saying you need more personnel988and more investigative resources? Is that what you are saying?989    Mr. Finta. Yes, ma'am. Similar to, again, ICAC, the990Internet Crimes Against Children Task Forces, which are991predominantly staffed with local police departments, where992those local and state resources can be used to support larger993federal and international investigations. The effect of that is994much greater than the individual investigations in local----995    Senator Gillibrand. You are saying you want to deputize996local law enforcement to help?997    Mr. Finta. Absolutely. If there was an EJTF, an Elder998Justice Task Force----999    Senator Gillibrand. A what? Say it again.1000    Mr. Finta. I am sorry, EJTF, Elder Justice Task Force----1001    Senator Gillibrand. Yes.1002    Mr. Finta. In every major city in the United States1003similar----1004    Senator Gillibrand. That allows you to deputize local law1005enforcement?1006    Mr. Finta. Absolutely.1007    Senator Gillibrand. I will work on that with you. What1008about tech? Do you have the appropriate technology? A lot of1009these scammers rely on voice recognition systems. They do deep1010fakes for voice deep fakes, for photographs deep fakes, for1011bank accounts. A letter from your bank saying, oh, you need to1012update your password. I mean, they are very sophisticated. Do1013you have the tech you need? Do you need a technology support?1014    Mr. Finta. Again, I will remind the chamber that I am1015retired from the FBI, and the FBI does grow and change every1016single day, but it is the government, and that is why I think1017it is so important for that relationship and partnership with1018the private sector to bring cutting edge current tech from1019those companies in--on this fight.1020    I think it is a good option that would replace huge1021results. If we brought tech companies, banks, retailers, and1022telecoms together, stacking that sort of evidence and1023intelligence would create an avalanche of positive cases and1024intelligence.1025    Senator Gillibrand. Mr. Iacovella, what steps should1026Congress take to address continued investments by PRC companies1027by state and local pension funds? Are there any scenarios where1028the fiduciary duty owed to the pension funds may conflict with1029the national security concerns at a federal level?1030    Mr. Iacovella. I think Congress should take steps to ban1031PRC investments. I think that the fiduciary duty that is owed1032to the beneficiaries is very difficult to comply with because1033diligence in that country is non-existent and you don't know1034whether or not the financial reporting, as Kevin said, is1035actually true and accurate because the Chinese Communist Party1036will assert state secret or a national security privilege when1037you try to do an audit, so that is why I think they should be1038banned.1039    Senator Gillibrand. Thank you. Thank you, Mr. Chairman.1040    Chairman Moolenaar. Thank you, Ranking Member Gillibrand.1041Ranking Member Krishnamoorthi.1042    Representative Krishnamoorthi. Thank you, Mr. Chair. Let's1043first take a look at some of these scam factories in Southeast1044Asia. Many of them are in Burma, along the border with China.1045Mr. Finta, the FBI understands from Thai intelligence that1046these centers are a haven for Chinese mafia engaged in fraud1047and criminal acts, right?1048    Mr. Finta. Yes, I believe that is true.1049    Representative Krishnamoorthi. The CCP could work with1050local authorities in Burma to shut them down, but for years,1051CCP in action allowed the syndicates to flourish, right?1052    Mr. Finta. Absolutely.1053    Representative Krishnamoorthi. As long as these centers,1054these scam factories continue to operate, these scammers will1055continue to target older Americans, right? No doubt. Let me1056turn to my next topic. It may not come as a big surprise, but1057the pictures that elderly Americans are getting scam texted1058every day are not actually of the people texting.1059    On the Chinese internet, criminals steal hundreds of photos1060of real people from their social media accounts and then1061impersonate them with their stolen photos. Mr. Finta, as you1062can see behind me, you can buy packages of hundreds of these1063photos for just %80 yuan, which is about $11, right, on the1064Chinese internet?1065    Mr. Finta. Yes, sir.1066    Representative Krishnamoorthi. Using these fake personas,1067Chinese cyber gangs then target older adults and convince them1068to drain their savings. The CCP says they can't go after the1069scammers themselves since supposedly the scammers are seeking1070refuge in Southeast Asia, but Mr. Finta, websites like these1071where scammers sell photos of unsuspecting young women are1072Chinese websites.1073    Mr. Finta. I believe that is true, sir, and it is common1074among the transnational organized crime groups to sell all1075kinds of information back and forth between different groups1076for different levels of exploitation.1077    Representative Krishnamoorthi. The CCP could, with a flip1078of a switch, take these down, right?1079    Mr. Finta. I don't know the--I don't know the technical1080side behind that, sir, but I, think they have great capacity to1081impact that.1082    Representative Krishnamoorthi. The CCP could stop this, but1083they are not, and through their inaction, they are complicit in1084the bankruptcy of countless older Americans, right?1085    Mr. Finta. I don't disagree with that, sir.1086    Representative Krishnamoorthi. Now, I would like to turn to1087my last topic. I want to turn your attention to a surprise1088guest witness, Daisy, who I mentioned in the opening. I had the1089chance to actually video chat with her yesterday, and she even1090gave me a compliment. Can you play the video?1091    [Video clip playing.]1092    As you can see, Daisy is pretty convincing and engaging,1093likely enabled by AI, live face filters, or deep fakes. The1094conversation quickly switched to investment. I had a question1095for her. I said, how much do you want me to invest in gold?1096    [Video clip playing.]1097    This is how people in scam compounds prey on older adults.1098The scammers start small and gain the victim's trust, then1099butcher them for their life savings. I then asked plainly, is1100anyone making you do this? Her response was not pretty.1101    [Video clip playing.]1102    We then gave up the jig and I asked her if this was a scam,1103but it did not end well.1104    [Video clip playing.]1105    What is really unfortunate is that this person pretending1106to be Daisy could very well have been trafficked or kidnapped1107and forced to work at a scam compound with CCP connections. Mr.1108Finta, just like we need to protect older Americans from these1109scams, it seems like we also need to stop the human trafficking1110that enables these scams, right?1111    Mr. Finta. I couldn't agree more, and honestly, if we1112worked together as a country and we put all those resources in1113one basket, we would have a lot more effect at making that1114happen.1115    Representative Krishnamoorthi. Right. It is like we, we got1116to protect our folks, our seniors, but at the same time, if we1117could stop the flow of this human trafficking, the people who1118are working at these scam factories would also be effectively1119shutting down the scams. I call on our committees to jointly1120work on these two issues together, and for all Americans to be1121vigilant of these scams as well. Thank you, and I yield back.1122    Chairman Moolenaar. Thank you. Chairman recognizes1123Representative LaHood.1124    Representative LaHood. Well, thank you, Mr. Chairman. I1125want to thank my Senate colleagues for welcoming us. I actually1126just came over here because I wanted to try the U.S. Senate1127water. We appreciate you having us here as House members.1128Thanks to our witnesses for, your testimony here today on this1129very important topic.1130    I will just state at the outset here, America's global1131innovation leadership matters, and Chinese leaders recognize1132that foreign know-how and capital are fundamental to their1133malign activities to unfairly bolster China's own domestic1134technological innovation, including AI, robotics, quantum, and1135semiconductors.1136    We have talked a lot in this Committee, the Select1137Committee on China. China has a plan to replace the United1138States, and they are working at it every single day. They want1139to beat us technologically, militarily, economically, and1140diplomatically, and the sooner we wake up to that, the better,1141and, as we think--unlike our democracy, the CCP can dictate an1142arbitrarily direct industrial policy as it relates to funding1143toward technologies they believe are most important.1144    We have seen that with CCP subsidies and investment in1145research rising six times faster than the United States. The1146CCP plays by a different set of rules and standards than the1147rest of the world and has a track record of exploiting U.S1148investments and intellectual property. We have heard a lot1149about that in our Committee hearings.1150    To develop Chinese domestic military and intelligence1151capabilities that undermine U.S. national security. New1152restrictions on access to U.S. capital and expertise could1153hinder the CCP's ability to innovate new technology, and we1154have a number of bills in the House right now that we are1155looking at. The U.S. must continue to create new tools to curb1156U.S. investment in CCP high tech sectors and prevent U.S.1157capital from being used to embolden the CCP's military.1158    I will start with you, Mr. O'Leary. We have heard from a1159couple of the witness--a couple of our members today on the,1160CCP's use of golden shares as a vehicle, but it also seems to1161be a vehicle for party control inside private companies.1162    From your vantage point, are there any private companies in1163China that have the ability to refuse a request from the CCP1164over business decisions under this structure?1165    Mr. O'Leary. I am sure they have the right to do that, and1166then you don't hear from them anymore. That is what I think1167happens. It is sort of a Jack Moss situation. I mean, you got1168to tow the party line. I think those are the rules. That is how1169it works.1170    He was an extraordinarily successful entrepreneur and then1171he disappeared for a while. I think that is how it works. I1172think if you refuse to cooperate with the golden share1173participation--remember, they are selling down to one percent1174with effective super rights with that one percent.1175    I am not sure you can go to your counsel in China and say,1176look, I would like to object to this and litigate this in1177court. In fact, I am sure you can't do that. That is what you1178would do here. If the government said to me, you are going to1179sell--you know, we are going to sell our complete holdings and1180we are going to keep one percent and we are going to tell you1181what to do every day in one of my public companies, I would1182say, sure, let's go to court.1183    That is why people invest here because there is an1184appellate system on a check and balance for crazy ideas like1185that, so my answer would be, there is no difference in China1186between a public company or a private one. There is just a1187golden share. That is it.1188    Representative LaHood. Thank you for that. Mr. Iacovella,1189as I mentioned, while the United States still funds most basic1190research--more basic research than China does, China investment1191is rising six times faster and is expected to overtake the U.S.1192in spending within the decade. How can we as policymakers1193support the development and fostering of innovation and bolster1194America's leadership position in this international1195competition?1196    Mr. Iacovella. Well, I think the--one of the first things1197we can do is prohibit American money from continuing to fund1198Chinese companies, and their innovation, and their military1199rise. I think that is what my big concern is and what I tried1200to articulate in the testimony is that we have companies on the1201commerce list, on the DOD list, on the human rights list.1202    These companies should not have access to our capital1203markets. They should not have access to anybody to be able to1204do business in this country, but for some reason, they continue1205to be able to take American investor money and fund their rise.1206    It is like a whack-a-mole scene where we put one on an1207index list, they create a subsidiary, and then that subsidiary1208starts to get money in our capital markets, and that is why1209whatever Congress does, it has to be very crystal clear on the1210prohibition.1211    Representative LaHood. Thank you for that. I yield back,1212Senator.1213    Senator Husted. Thank you. Thanks for being here today. I1214am John Husted. I am Senator from Ohio, and I wanted to talk a1215little bit about AI. I know that Senator Rosen and I have a1216bill that would prohibit DeepSeek from being on any federal1217devices.1218    I have, you know, grown concerned about how, you know, we1219talk about the scams with seniors and certainly foreign1220adversaries like China are exploiting our freedoms. We allow1221these technologies to freely flow inside of America while they1222prohibit those same kinds of technologies from being available1223to their population. Mr. O'Leary, I will just--I know you have1224a lot of experience in looking at these investments in China1225and abroad.1226    Do you have any thoughts on AI, particularly DeepSeek or1227anything in that space? How our freedoms--how they are--how1228Chinese government and Chinese businesses are perhaps1229exploiting our freedoms and what threats AI pose in that space,1230particularly for our seniors and scams that could be1231perpetrated in America?1232    Mr. O'Leary. Yes, that is a good point. You know, this1233issue around AI competition--it is my belief that the country1234that advances AI the fastest and with the most capacity, is the1235safest from a defense point of view.1236    I don't care where warfare goes in terms of technology, it1237is going to be driven by AI. Predictive outcomes in a war1238scenario. If I were China, I would want to be the most advanced1239and as fast as I could in AI just to prepare for warfare in the1240future. That is what we should be really concerning ourselves1241with. Do we have the most advanced AI? You can see the effects1242of AI--we talked about fraud.1243    You can see the propaganda as of 48 hours on TikTok right1244now. Incredibly, remarkably generated images of overweight1245Americans at sewing machines. That Is all AI driven. The1246challenge we have, and it is almost worth its own1247investigation, is the country with the most power wins AI1248because you have to build giga sized data centers. Right now,1249in America, we have a demand for 45 gigs--5 gigs are under1250construction.1251    What holds us back in North America, Mexico and Canada,1252included, is permits and power. If you go to any authority1253here, any state, and ask for a gig of power, you can't get it.1254It is just not available.1255    Our grid is maxed out, and China has solved this problem1256with coal powered electrical plants that are generating a1257tremendous amount of electricity. They don't have a problem1258with permitting. The government finds the land, they build the1259facilities, and they power it with over 1.4 gig of power.1260    One of the reasons they were able to advance DeepSeek so1261quickly was they got the power to do it, and you have heard1262lots of warnings about this, but AI should be earmarked as1263number the one issue for defense. That is what I think it is--1264in every way, including propaganda and everything else, but if1265we don't have the best AI, we won't be winning militarily in1266the future.1267    Senator Husted. Well, that is--I think that is a really1268good point, and if you study the history of the world, the1269nations that are the most military and economically dominant1270are nations that are the most innovative.1271    New technologies from the beginning of time have advanced1272as military weapons that allowed for nations to conquer or be1273conquered. It certainly creates that same opportunity from an1274economic point of view, because look, militaries are built1275through the revenue and the growth of a country--of a nation's1276economy.1277    Mr. O'Leary. The tech.1278    Senator Husted. The tech is financed from that economic1279dominance, so economic dominance begets military dominance.1280Military dominance traditionally has been helpful at economic1281dominance and conquest and setting the rules of the game for1282global competition. The other two gentlemen who are with us1283today, you have any thoughts on that--those particular issues?1284    Mr. Iacovella. I think that we could go back to exactly1285what Kevin was talking about in the beginning, and what I have1286tried to talk about, which is the playing field is not equal.1287Our companies are playing on an un-leveled playing field to1288access the capital.1289    Over there, it is going into China, and it is--it may never1290come back. Xi makes one decision and then that is all gone, and1291we don't know how deep and how far the investment ecosystem is1292in private equity, in pensions.1293    It is in mutual funds. Any of these that hold Chinese1294companies can go to zero tomorrow if Xi decides to do, and I1295think that is what the scariest thing is from my perspective.1296    Senator Husted. Okay. I am out of time, but I will say to1297this point, these technologies in a free society that are1298yielded by our adversaries and people within those nations who1299will not police the rule of law can be weaponized against our1300citizens, and in this particular case our elderly citizens in1301this Nation, and we got to wake up to it, and I appreciate your1302thoughts. Chair recognizes Representative Caster.1303    Representative Castor. Thank you, Mr. Chairman. Thank you1304to the witnesses for being here. I want to apologize if I have1305been squirming in my seat. I am--just like our neighbors and1306small businesses across America are suffering whiplash right1307now because of the economic chaos that has been inflicted upon1308us by the White House and the President over the past few weeks1309regarding imports, the import taxes, and just the sheer chaos1310of not knowing what is coming next.1311    To the subject of this hearing, that kind of chaos empowers1312the Chinese Communist Party. That emboldens them to continue1313their malign economic abuse of our seniors in this country, but1314our businesses, our allies, our friends.1315    The Chinese Communist Party, they know that these1316fraudsters and sophisticated scammers target older Americans to1317steal their hard earned cash. Especially poignant in a state1318like Florida where 20 percent of the population, over 65. In1319the latest report to Congress regarding the protection of older1320adults, the Federal Trade Commission stated that older adults1321reported losing more than $1.9 billion to fraud in 2023.1322    That is just the cost of the reported cases. The vast1323majority of frauds are not even reported. I heard you, Mr.1324Finta, talk about your mother, your parents. I hear these same1325stories from my mother and her friends. They just feel like1326they are over the barrel. That they are being preyed upon.1327    They are not exactly sure what is coming at them next. They1328want help. The problem is that the White House now, not just1329causing this economic turmoil and uncertainty, they are also1330going after the cops on the beat, particularly the Department1331of Justice and the Federal Trade Commission.1332    The Federal Trade Commission is our--one of our premier1333consumer protection agencies. It has a critical role in1334fighting fraud, and it gets more complex all the time, so to1335divert resources from a Federal Trade Commission that has grown1336expertise over time to tackle these kinds of abuses, it just1337doesn't make any sense.1338    Here is a glaring, flashing warning light right now. Not1339just the economic turmoil caused by the President, but what he1340is doing and the fact that Republicans and Congress are not1341standing up to keep the cops on the beat at the Federal Trade1342Commission. We are talking about they are investigators, they1343are enforcers, and the President even went so far as to attempt1344to fire Commissioners from the--just the Democratic1345Commissioners of the FTC.1346    Now, here is the problem. Congress in a bipartisan way a1347few years ago established the FTC as an independent, bipartisan1348enforcement agency. They have a long history of defending1349consumers, so when you take the cops off the beat and then you1350say, well the FTC, we don't even want you to operate, then you1351are just hamstringing our own selves--our ability to counter1352the CCP in all of their malign efforts.1353    Mr. Finta, you, in your testimony, you said, in your1354exchange with Senator Gillibrand, you said we need to double1355down. We need to recommit through the Department of Justice,1356and wouldn't that include the Federal Trade Commission too1357where we have experts on--that are ready to go on task and work1358to counter the Chinese Communist Party and the fraudsters?1359    Mr. Finta. I appreciate the question, and I think the1360Federal Trade Commission would be an essential partner in this1361whole of society approach, this task force. I will say that1362historically with each agency, regardless of cutbacks and1363changes in different Administrations, working independently, we1364continue to lose.1365    The problem keeps getting worse year, after year, after1366year. I think probably the bigger issue is establishing a1367working relationship that includes the FTC, the other law1368enforcement agencies in the United States, and the private1369sector to share the appropriate amount of data to have effect,1370which hasn't really been the case at an effective or impactful1371level in the past.1372    Representative Castor. I agree with you, and I salute you.1373Thank you to our witnesses for being here and helping us to1374call out these scammers, these fraudsters. We all have to1375recommit and definitely not take the cops off the beat and1376create economic turmoil that pushes people into the arms of the1377Chinese Communist Party. I yield back.1378    Senator Moody. Thank you. I know it is probably a little1379bit confusing with folks running to vote and get back--getting1380back here to hearing, and also, who is chairing the Committee.1381    I am proudly taking over chairing the Committee. I am1382Senator Ashley Moody from the Tampa Bay area in Florida. Like1383my House colleague, who also represents the Tampa Bay area, it1384is really great to have you here. I was an Attorney General for1385a long time in Florida, and one of the things that I worked1386hard against were the scams that were affecting our senior1387citizens. It was one of my top priorities. There is no doubt1388that these--some of these are emanating from China.1389    What I think has leaders from both parties'- struggle with,1390just like the American public struggles with, is understanding1391exactly how China and the Chinese government is operating to1392undermine American interests, and I believe American strength1393and security.1394    In fact, I just launched a bill and sponsored a bill, one1395of my first, which was sadly to not issue visas to Chinese1396nationals that want to come here on student visas because over1397the past few years we have had to arrest so many Chinese1398nationals here on visas that were sneaking onto our military1399bases, taking pictures.1400    It has just--it has happened in the State of Florida, and1401it should be no surprise, if anybody was following it, that1402China passed laws just before the Biden Administration. The1403first one was all Chinese nationals had to cooperate with1404matters of national security, and if you were a Chinese1405national, you had to participate with intelligence gathering or1406face consequences.1407    Why we are issuing visas to Chinese nationals that are1408coming over here makes no sense. We are inviting agents of the1409CCP into our country when they are obligated by law to gather1410intelligence. That seems a simple step to me--something we can1411do as leaders, and what I have been fascinated with and1412appreciate is your testimony and your experience in identifying1413ways that China is acting that is undermining America's1414interest.1415    That is why I am so grateful for President Trump and1416putting America first, and part of that lies in, Mr. O'Leary, I1417should say, you are always saying people think that they are1418investing in Chinese companies and in fact they are investing1419in ways that may be undermining our own interests or1420undermining their own interests. I know you have had experience1421with that. You have been gracious enough to give time and talk1422to other Senators about that.1423    Again, we have discovered things over time, and I will go1424back to, we caught them setting up police stations in our own1425country, right. We have caught them stealing intellectual1426property from our universities and setting up institutes within1427our universities. I mean, there are ways that we have tried to1428reveal these very directed, specific targeting of undermining1429American interest.1430    I will turn my first question to Mr. O'Leary. you have1431discussed how American investors essentially own nothing in1432China and how the CCP government maintains an ultimate veto1433over its companies. In your view, what efforts can we do to1434convince our colleagues and the American people that the1435government of China cannot be trusted as long as we are willing1436to tolerate the totalitarian regime in Beijing?1437    Mr. O'Leary. Well, step one, which I think is going to be1438the easiest path of least resistance is to simply enforce1439existing laws, particularly in capital markets where those of1440us that are compliant have to compete with entities that are1441not.1442    If you have a golden share or if you haven't produced GAAP1443statements that are transparent over the last 24 months, you1444are going to get delisted, and that is going to be billions of1445dollars getting evaporated off our exchanges, and that I think1446is a wakeup call to China, which really, if you think about it,1447wants to become the eighth member of the G-7.1448    The G-8. If they want to play with the big boys, they are1449going to have to play by the rules. Everything stems from1450capital. You can't build an economy all on your own. You have1451to get access to capital, and we have provided an amazing1452platform for China to tap into the world's greatest economy,1453from a consumer basis where they can sell their products, and1454also the rule of law to raise capital.1455    That has not been fair. It has not been a leveled playing1456field. Just to be sure, I actually want to invest in China, and1457I want to compete in China, and I want to be able to sell1458products to Chinese consumers. I have got nothing against1459Chinese consumers. I feel that American technology and1460innovation can compete anywhere, and I just want to compete on1461a level playing field. We need to impose a level playing field.1462    The only way to do that after watching for 20 years and1463multiple Administrations, not only here domestically but1464internationally, nobody has called them to the rug. Nobody has1465said, okay, you are not complying, and all they have been1466taught from us is there is no consequence.1467    You can do whatever the hell you want, and you don't pay1468the price. That is what our message has been for 25 years, and1469I am only asking as one voice, when is this going to change? I1470mean, when? Because if it doesn't change now, they are going to1471continue to take advantage of us in every way possible,1472including IP theft. Which I bet you, and this is a personal1473opinion, you give me any Chinese technology that is advanced,1474and you reverse engineer it, I will show you American code from1475some decades, as many as 40 years ago. I swear to you, I1476believe that.1477    We never did anything about it then and we are not doing1478anything about it now. We are here to say it has got to stop.1479We are the guys in the front line. We are dealing with this.1480You have heard my colleagues talk about this. It is just not1481fair, and I am just asking for you to impose the existing laws.1482    If you do that, believe me, those boys are coming over here1483on an airplane. That is what is going to happen. You can't1484cutoff people from the United States market, the largest on1485Earth capital market, without a consequence.1486    Senator Moody. Well, we appreciate you certainly being here1487and being a part of this process where we are calling it out,1488and conducting a Senate hearing, a joint House and Senate1489hearing is certainly part of that, and I want to commend our1490Chairman of this Committee, Senator Rick Scott, who has really1491used this Committee to tackle some of our most challenging1492issues, not only confronting the threats from China, from the1493opioid crisis, to how do we confront the most pressing issues1494facing our seniors.1495    I want to thank you, Chairman. I also want to thank you for1496coming back so that I can pass the gavel right back to you.1497Appreciate it, Mr. O'Leary.1498    The Chairman. Thank you, Senator. Yes, we have got a lot of1499votes this afternoon, so I have to go back and forth for votes.1500Senator Kim.1501    Senator Kim. Yes. Thank you, Chairman. Mr. Finta, I wanted1502to start with you. As I was preparing for this hearing, I was1503trying to get a sense of just the magnitude of the problem that1504we face, and I think every single one of us realizes that, yes,1505we don't know the full extent and scope of what we are dealing1506with.1507    I thought, in fact, your testimony, I thought approached1508this with a sense of humility. You said, I believe only 10 to150915 percent of elder fraud victims ever report the crimes1510against them.1511    I guess I just wanted to start, based off of your1512experience, are there any best practices that you have seen or1513are there certain types of steps that we should be taking to1514make it easier for the reporting or try to have a better1515handle, try to do better, encourage people to come forward, but1516also, you know, making sure that we know what we are actually1517dealing with?1518    Mr. Finta. Absolutely. Thank you for that question to--it1519is a great opportunity to talk about what should be as opposed1520to what is right now. Unfortunately, right now in the United1521States, the reporting is remarkably low.1522    One of the other kind of consequences of the crime itself1523is that a lot of our seniors would prefer to report to their1524local police departments. When you walk into a police1525department in the United States right now and you say, hey, my1526mom, or my dad, or myself was the victim of a pop-up ad on the1527internet where I went to a digital currency ATM and sent money1528overseas.1529    Unfortunately, the vast majority of the time, what you are1530going to immediately get is, hey, I am sorry, there is nothing1531we can do.1532    Senator Kim. Yes.1533    Mr. Finta. You should call the FBI, or you should, you1534know, file a claim with IC3. When you call the FBI as an1535individual, or HSI, or you file a claim with the Internet Crime1536Complaint Center, you are viewed essentially as an individual1537who lost $30,000. It could be your life savings.1538    Unfortunately, there is hundreds and thousands of those1539complaints, and without a real combined effort to aggregate,1540really analyze, and work the most pressing complaints. Again,1541with our private industry partners, we are pushing a giant rock1542uphill as law enforcement, and it does not encourage people to1543do those reports when they don't see the effects of them,1544right.1545    When you file a complaint and that complaint does not get1546worked, you are not called to testify at a sentencing hearing.1547You don't get that.1548    Senator Kim. Yes. Well, you know, even and you said here in1549the followup sentence, even with this low percentage of volume,1550complaints are still far too large to investigate under current1551circumstances, as you were saying. I guess I wanted to just1552ask, are we thinking about it in the right model here?1553    You know, I wanted to--I was about to ask you like, how1554much more do we have to surge resources toward this. You know,1555this is Sisyphean effort though, in terms of just, you know,1556constantly feeling like we are never actually going to scratch1557what is actually there.1558    I guess I wanted to ask you, in terms of what you1559experienced, are we successful in addressing some of the1560complaints that we had, or is that just not the right direction1561in terms of being able to put our resources toward?1562    Mr. Finta. No. I believe with any large problem, there has1563to be multiple approaches to combat it. This is just one of1564them in terms of actual investigation enforcement. I do believe1565that if we constructed--because I did have great success, at1566least locally, on the Elder Justice Task Force in San Diego1567County with 13 police departments all participating--with1568private industry participating almost in real time.1569    It is effective as a model if you proliferate that across1570the country. The combined results of 50--100 EJTFs around the1571country would start to have a disincentive effect on those1572groups overseas and the people here facilitating those crimes.1573    Senator Kim. I see, so you are saying if you can replicate1574that type of structure and have it scaled across our country--1575but still would need to be some type of coordinating body. Is1576that something that you see be able to be rest within the FBI1577or is that something at the Federal Government level to try to1578coordinate across?1579    Mr. Finta. Well, that is a good question and that is1580outside of my lane in terms of speaking for other agencies. I1581do think, again, with, for example, National Elder Fraud1582Coordination Center, to aggregate the data from U.S. companies1583who do have amazing resources to support those types of1584investigations would be a game changer.1585    Senator Kim. Yes. Okay. Thank you. I am out of time, so I1586will yield back to the Chair.1587    The Chairman. Thank you, Senator Kim. Senator Justice.1588    Senator Justice. Well, first of all, thank you for all1589three of you coming and your testimony. I didn't get to chance1590to hear it, and so--you know, we have been running back and1591forth doing all these votes and everything, but I have got to1592just tell you just this. You know, for one of you, Kevin, we1593have become real friends and what an incredible man this man1594is.1595    You know, I have had him in my office in Charleston, West1596Virginia in the Governor's office, and I had the opportunity to1597be the Governor of the State of West Virginia for eight years.1598I can tell you that I can speak very frankly and say, I don't1599know that anybody has been in that office that has been more1600credible than this man. I appreciate our friendship.1601    He has done every single thing that he said he would do,1602even to the point in time when he called West Virginia a winner1603state. I would say just this, if West Virginia is a winner1604state, and I love, I love the contest of ball games and1605everything, but absolutely, we can't possibly say we are1606winning, we are absolutely winning when it comes to China. I1607don't see how anybody can say that and say that in a fair, fair1608way.1609    Now, I can honestly say just this too. One of his1610companies, Prime six, and I hope I am not stepping out of my1611bounds and everything, but he came in November of last year. We1612were sitting, you know, in a location in Fairmont, West1613Virginia. He said, we are going to make this a go. We are going1614to make it a go now. I think they are scheduled for June, from1615November to June, and absolutely they are pulling it off. Like1616I said, as far as credibility, he has not only my vote, but1617many, many, many in this great--in the great State of West1618Virginia.1619    With all that being said, you know, Kevin, as your friend,1620I would just ask just this because we have got a lot of elderly1621people in West Virginia, and those retirees are absolutely1622being bombarded in a lot of ways. You know, I have--I thank you1623for bringing awareness, all three of you, awareness to a real1624problem in this great country that we know about, but we don't1625seem to do anything about it.1626    You know, Kevin, just a minute ago said just that. We know1627about it. For God's sakes of living, this can't be that hard.1628You know, we know about it, and we don't do anything about it.1629Well, I really don't get it. Like I said, I am a new kid on the1630block here, but I am a kid that abounds in common sense and1631logic, and goodness, and truth.1632    I have got just one question, and it is just an echo of the1633same question, but it just basically says this. It says, the1634lack of transparency, financial representation, ties to human1635rights violations, and scams are just many of the reasons why1636investing in Chinese companies has become a real and unique1637threat.1638    What can individuals in West Virginia, the residents of our1639great State, do to help protect themselves, and their1640retirements, and their pensions, and their--from these1641financial threats, and so, please Kevin, if you would, and you1642have probably already given us a whole bunch of advice already,1643but I didn't have the liberty to be able to be here to hear it,1644but please tell us more wisdom.1645    Mr. O'Leary. Well, I just feel that if the initiative and1646the incentive from these hearings and with other members is to1647enforce existing laws as they stand, we will end up in a much1648better place in terms of our relationship with China, because1649they are a large economy. We are larger.1650    There is a chance to work all this out. I might add that1651while we have been sitting here, my phone has been lighting up,1652the market is up 3,000 points because what is occurring here is1653the tariff situation with the rest of the world, although1654chaotic, is getting organized. It seems that way. 69 countries1655coming to the table, and maybe we end up with zero tariffs. I1656don't know.1657    China is not the same. It is not the same. We have to1658resolve the issues we have been talking about here today as1659part of the negotiation. I don't care if we get to 400 percent1660tariffs on China. The only thing I care about is getting them1661to the table to resolve these issues to make it safe for every1662American to invest there or do business with them, including in1663West Virginia, and you know, this is changing by the hour, but1664now I am starting to see what's happening and so is the market1665too. The world is one thing. China is completely different.1666Tariffs are being used to get them to the table, to level the1667playing field finally. All of us that are involved in dealing1668with this and competing with it, applaud it, I can assure you.1669I am the voice of millions on this that have been doing1670business there.1671    Something else West Virginia can do that I think is going1672to be coming into the highlight pretty soon as we get into this1673AI competition with China. There are very few states or1674locations in America, or Mexico, or Canada that have as much1675stranded natural gas as West Virginia has, and that is pure1676gold for AI. Now, I can speak to you as, you know, in working1677with your government.1678    You moved permits quickly for that Prime six plant you1679spoke of and that is why it is happening so fast. Do the same1680thing in AI development. Allow companies to come there. Tap the1681stranded gas. Bring in the turbines. Build the facilities, and1682light up AI. You can't do that right now in Virginia because of1683the rules and regulations were not allowing gas turbines to1684work in conjunction with diesel backup generation, and so, the1685sites in West Virginia have become prime real estate now for1686AI.1687    You are going to--you will transform your state's economy1688by embracing energy because we don't have enough in America,1689and there is--you have Senators there and you have--there is1690lots of other people in your government in West Virginia that1691understand this opportunity is huge. It is absolutely huge.1692    Demand is insatiable. You got to tap that and move at the1693same speed you did--and I am just one investor in West1694Virginia. It was a winner state because you got stuff done and1695everybody has to hear that message.1696    Senator Justice. All right, thank you so much, and thank1697all of you. Thank all of you for being here today.1698    The Chairman. Mr. O'Leary, what if there was a company1699called WeatherTech, you know, and they produce really nice mats1700for the car.1701    Mr. O'Leary.. I have them in my F-150. The Chairman.They1702woke up one day and they looked on Alibaba and they saw that1703their products were being sold on Alibaba. They looked at their1704shipping and they, you know, they have never had done any1705business with Alibaba. They looked just like the mats that they1706produced in Illinois but--and they even had their name on it,1707right. What could they do to stop this theft of their product,1708and they got nothing for it. What would be their recourse right1709now?1710    Mr. O'Leary.. There is nothing they can do. You have just1711told the story of a million small businesses in America over1712the last 20 years. They innovate. They create. They are1713entrepreneurs. They prove their product to the Americans'1714consumer market. At around $5 million in sales, they are1715knocked off.1716    By whom? China. Very often the same plants that ran the1717molds under a relationship they had with the company--a lot of1718companies went to China 20 years ago, 10 years ago, and put1719their molds there, and during the day, the company would run1720the WeatherTech mat in this example here, theoretically, and1721then at night they would run the knockoff mat, and they would1722bring it into the market, and let me guess, 30 percent off1723retail of the WeatherTech.1724    I have seen this happen countless times, and in some cases1725where the company is very small, they go out of business, and1726nobody hears that tree falling in the forest. It happens1727thousands of times. There is such an immense opportunity here1728to just to enforce existing laws, but really at the end of the1729day, the reason that behemoth company couldn't do anything1730about it, they have no access to the Chinese courts. They can't1731resolve the complaint through litigation as we do here.1732    My recommendation is, look, if you are a Chinese company1733and you want to use our courts to litigate your complaint?1734Sorry, not until you open yours. We would love to work with1735you, but unless it is a reciprocal--the whole idea of today's1736conversation was just to get to a reciprocal playing field--an1737even playing field.1738    American companies have always been very competitive1739anywhere on Earth when given a chance on a transparent and1740competitive playing field. That is not the case in China. I1741mean, we are all saying the same thing here. It has got to get1742fixed, and finally, finally, here we are with tariffs being the1743excuse, but now I think Xi has to come to the table and I hope1744it happens, and I would like to see tomorrow morning 4001745percent tariffs.1746    The Chairman. Let's say there is the same company called1747WeatherTech, and they know Alibaba is selling in the United1748States of America to American consumers. They wouldn't be able1749to get money out of Alibaba right here?1750    Mr. O'Leary. No. They can try. Sometimes if it is a big1751enough case, they will take it down. Amazon is much better if1752you can prove that you own the IP and you know----1753    The Chairman. They couldn't get any damages out of1754Alibaba----1755    Mr. O'Leary. I have never heard of a case resolved to the1756satisfaction of the company that is making the complaint, ever.1757    Now, there may be a case I don't know of, but the WTO is1758supposed to provide this platform. You find me one year since17592020 where there haven't been a plethora of complaints exactly1760like the one you have just detailed and there has been no1761consequences. None. Zero.1762    The Chinese economy has done very, very well on the back of1763stolen IP, and ripping tech off, and using products at much1764lower price points that they have made themselves based on1765American IP.1766    Look, it has got to stop. I mean--and I am sure most1767Chinese people would love to compete. There is great Chinese1768entrepreneurs. They don't need to cheat and steal. They can--we1769just need a level playing field.1770    I would love to see this resolved and I hope it happens,1771but I say, and what I have learned and what I have seen in my1772long career, is China understands only one thing, the stick.1773Give them the stick. They respond to the stick.1774    The Chairman. Hopefully today we will confirm a new1775chairman to the Securities Exchange Commission, so what would1776you ask him to do? What do you think his responsibility is?1777Because so if I--you know, I used to take companies public, and1778when I took them public, I had to have current financial1779statements.1780    I had to disclose all the material information, right, and1781so, and the SEC enforced it, right. I had to do it with when I1782took things public and I sold securities and I had to do it1783with my 10 Qs and 10 Ks, every quarter and every year, so what1784should he do right now? He will probably be sworn into office1785tomorrow. What should he do?1786    Mr. O'Leary. I assume you are referring to Paul Atkins.1787    The Chairman. Right.1788    Mr. O'Leary. He should go right back to the files and1789execute the mandate the law has given him. There must be dozens1790of companies that are offside right now in compliance on GAAP--1791dozens. They should have been delisted two years ago. They are1792still trading. They are still raising capital.1793    They are still competing with people like me for that1794money, and they are not compliant with GAAP. There is no way on1795earth I could do that. I would never have that opportunity, and1796yet they do. All I want from him, and I think you will hear a1797lot of people saying the same thing is, you have this mandate,1798now enforce it.1799    The Chairman. Yes. What about, you know, these, you know,1800Wall Street firms that say, you know, look, American investors,1801they want to invest in these companies, and if we don't allow1802them to invest in the American stock exchange--through the1803American stock exchange, they will just go some other place.1804What would you--what would your response be to that?1805    Mr. O'Leary. What is going to happen when this law starts1806to be enforced is--and this is the case in almost every1807regulator. There is the seven big regulators on Earth. They1808speak with the SEC practically weekly.1809    Everybody complies with the law that is actually1810implemented and enforced in America in one way or another. They1811don't want to be offside with the world's largest capital1812market. It is not that they like us. They want access to the1813largest capital market. The reason the ADGM in Abu Dhabi1814doesn't want to get involved with companies that are not1815compliant with the SEC or whatever body it is in the U.S. is1816because they want access to the world's largest and most liquid1817capital market, and they don't want to ever be offside.1818    It is the strength of America and the access to the market1819and the largest consumers' market that gives it its strength1820and it hasn't used it, and this Administration finally--and a1821lot of people don't like the style of the President. I get it,1822and listen, with Trump, the way I look at it is I don't focus1823on the noise.1824    I focus on the signal. What I am hearing is, enough and we1825are going to enforce the laws, and that is probably a good1826outcome for everybody. Although, you know, watching the market1827go up and down 3,000 points a day, people gnash their teeth,1828but if that is the price, it is worth it.1829    The Chairman. Chris, is this just a theoretical issue1830that--you know, that these Chinese companies, we don't really1831know what their financial statements are, but it is never1832really a problem. No one ever loses money. Is that ever--has1833that ever happened or is it just a theoretical problem?1834    Mr. Iacovella. No, it has happened. There have been1835multiple companies. There was a pharmaceutical company named1836Kang Mae where one day it was a growing concern and the next1837day it had a $15 billion hole in its balance sheet and that was1838because the CCP decided it was no longer a useful concern for1839it.1840    That was part of some of the index funds. That is one of1841the reasons why we started to get involved in this, and to1842answer your--to add to what Kevin said on your previous1843question, they can go overseas if they would like to, but there1844is no rule of law in Hong Kong. There is no rule of law in1845mainland China that stands up to our rule of law, and there is1846also something called a fiduciary duty, which requires you to1847do due diligence, to investigate. You have an obligation to1848your shareholders to take into account reputational risks, to1849your political risks.1850    The fact that they might just take over the whole board1851from a Monday to a Tuesday, or that they might impose capital1852controls which basically absorb all of the retained earnings at1853that company, that is too big of a risk to take as a fiduciary.1854I think that is a false argument. I have heard it multiple1855times and that is how I would push back on it.1856    The Chairman. If an American investor--let's say 65-year-1857old woman invested in a mutual fund and they invested in a1858Chinese stock, and you know, they lied and unfortunately it1859went to zero, the mutual fund would not take the money out of1860the--it wouldn't take the money out of that poor lady's--they1861would eat that loss themselves, wouldn't they?1862    Mr. Iacovella. Well, no, that fund would bring down the1863overall return.1864    The Chairman. You mean the lady would lose money even1865though the mutual fund allowed--they are the ones who bought1866the stock that didn't comply with GAAP?1867    Mr. Iacovella. That is right. That is--and that is why the1868passive index loophole is such a problem because none of those1869companies comply with any of our laws, and yet American money1870goes straight into them, particularly----1871    The Chairman. Would the exchange that that stock is traded1872on, would they take the responsibility so the lady wouldn't1873lose money?1874    Mr. Iacovella. If it was in the United States, here, I1875think there could be some recourse against not only the1876underwriters who brought that stock into our exchange----1877    The Chairman. Has that happened?1878    Mr. Iacovella. Nope, it hasn't----1879    The Chairman. The underwriter who sold the stock of a1880company that didn't comply with GAAP has no liability in the1881United States?1882    Mr. Iacovella. That has not been tested yet.1883    The Chairman. What do you think the law is?1884    Mr. Iacovella. With an American company that--has been1885tested multiple times and the underwriter also is liable1886generally. Now, the exchanges are self-regulatory1887organizations, which means they have legal authority to adjust1888their standards, and they are supposed to protect the integrity1889of their marketplace, and if they have companies trading on1890their market that aren't complying with U.S. laws, then they do1891have some sort of a regulatory obligation to remove them, to1892protect the integrity of the market and the investors who trade1893on it. To date, they haven't done that.1894    The Chairman. The underwriter has had no personal--no1895liability. The exchange has no liability, and the mutual fund1896has no liability, so all the money--so somebody--if they all1897did this, then the only person that is holding the bag is the189865-year-old lady that thought she was buying into a safe mutual1899fund.1900    Mr. Iacovella. That is correct, Senator.1901    Mr. O'Leary. Can I add something to that because I think1902you made a great point. Let's say Atkins delists the Chinese1903company and they immediately go to the London Exchange and say,1904oh, I just got delisted off the New York Stock Exchange and I1905want to get listed now here. I would think the regulator there1906would say, can you tell me why you got delisted?1907    Oh, we broke the law in the U.S. Oh, please come and list1908here. I mean, obviously if you are a mutual fund manager with a1909mandate, you are not going to want to touch that company. Once1910they get tainted by breaking U.S. securities laws, that is a1911tattoo forever on that board.1912    They are not going to escape into any market on Earth. It1913is going to make their shares worth 60 percent of retail, so I1914am not worried about anybody moving, and I suggest my colleague1915is 100 percent right. Once they get delisted for breaking the1916law, they are radioactive waste in financial services.1917    The Chairman. Mr. Finta, so if you were--if you were the1918new FBI Director, all right--I will give you just something1919one--a Florida Sheriff said to me. They said, you know, we1920probably don't really need a lot--a whole bunch of help on any1921more bank robberies like we probably needed in the 30's. What1922we really need is help on these international scams because we1923don't have any ability to deal with these international scams.1924What would your recommendation to the FBI be?1925    Mr. Finta. Sir, I would recommend a reshuffling of1926resources to include treating these types of scams and frauds1927as transnational organized crime. At the moment, to some degree1928depending on where you are, but they are generally looked at as1929a white-collar crime. The type of investigation that one1930conducts on white collar crime as opposed to transnational1931organized crime tend to differ.1932    Also, transnational organized crime has the ability to rope1933in agencies all across the United States to assist, which is1934what you need when you have money mules in 14 different states,1935victims in 50 states, actual organizers in a dozen different1936states. You need a team to work those types of cases.1937    I would also step up the amount of interaction on a real1938time basis with America's companies, with our private sector,1939so that the access to that data, where the evidence lies,1940happens faster to increase the amount of accomplishment in a1941shorter period of time. We could do more cases with less.1942    The Chairman. Things like bank robberies or other issues1943that the FBI historically had been involved in, that probably1944local law enforcement has the ability to do on their own--there1945is probably other areas. If they actually said, we are not1946going to focus on that, but we are going to focus on these1947international scams, would the FBI have the resources to put a1948lot of smart talent against these international resources--1949international scams?1950    Mr. Finta. The FBI hires pretty well, sir. I think they1951have a lot of good smart people that can do this. I will say, I1952am not going to speak for the FBI and what the resources are1953right now.1954    Just like we did with the healthcare fraud task forces in1955the past, I think it would be appropriate for the Congress, for1956the Senate to actually staff those with budgets, with1957requirements to say, hey, listen, if we are going to ask you to1958do this, we are going to give you the resources to do it.1959    If we did, as a country, we could accomplish a lot of good,1960so Kevin and Chris, if you--so let's say I have a new company1961and I feel really good about it and I want to take it public,1962all right, so is the--why wouldn't I just pick--you know, there1963is no real reason--if I could pick any exchange of the world,1964right, wouldn't it be--what if I could--would I have any1965discount if I said, I am not going to do it here.1966    I am going to go and do it on the Indian Stock Exchange or1967the Hong Kong Stock Exchange, or the Shanghai, you know, Stock1968Exchange. Is there any reason why I would get more money, and1969my trading will be clearly more liquid if I pick an American1970exchange? Is there any reason to have it--is there any reason1971not to do it?1972    Mr. O'Leary. Every company on Earth--pretty well every1973company on Earth given the option would either list on the New1974York Stock Exchange or Nasdaq, period. The reason they would do1975that is the amount of capital that is interested in investing1976in a company that has gone through the rigorous compliance and1977transparency, the regulatory laws here on issuing a prospectus,1978and the fact that they could get indexed into the billions and1979trillions of dollars that are actually invested in indexes1980where their company might be included.1981    The largest index on Earth is the S&P 500. It is the gold1982standard. United States remains the gold standard for public1983listings. There are very few exchanges that can compete. A1984company, most of the time, if they believe they are compliant,1985will always see the availability of an NYSC or Nasdaq listing1986first.1987    Very often they will try London next, but it is, every1988institutional investor on Earth in one way or another puts1989almost half their capital into one of those two exchanges. They1990are the largest on Earth, and they are going to remain that way1991while the rule of law is transparent and we have an appellate1992system, and we actually enforce these laws because it is--the1993American economy is actually based on confidence. That is what1994it is, and the belief that it is the most transparent legal1995system on Earth.1996    Now, we have gone through a lot of issues around it, but we1997have had these issues before. Why is it even adversaries want1998to invest their capital here? You have to ask yourself that. It1999is trust. That is it, so the answer is, more people, even2000adversaries, trust the United States than any other country on2001Earth, and the way you can tell is how they vote their dollars.2002It all comes here.2003    Anything that--by not enforcing laws, we actually breach2004that trust. We should be--you know, when Atkins comes in here,2005he is the steward of these laws. His mandate is to enforce them2006to show the world that he and his mandate, and the country, and2007the system, and the exchanges can be trusted. Anybody that did2008not enforce those laws was hurting the American brand.2009    That is what they were doing, and that has got to get2010fixed. You don't want to hurt the mothership, the American2011dream, the American brand that transcends bipartisan politics2012or any generation? It has to be maintained. The way you do that2013is you enforce these laws. I am very hopeful that you are2014right, that we are going to see a lot of these delists, and I2015am looking forward to it. They can do the right thing and do2016like I have to comply.2017    Pay for that compliance. Hire a firm. Pay the millions it2018costs to stay listed. I am happy they will do that because I am2019happy to compete with them.2020    The Chairman. All right. Ranking Member Gillibrand.2021    Senator Gillibrand. I just want to thank the three of you2022for your excellent testimony. This was a superb hearing and2023each one of you contributed a great deal of substance and ideas2024to the House and Senate, Democrats and Republicans, to work2025hopefully on a bipartisan basis, to write some legislation to2026correct some of these challenges and problems. Senator Scott2027and I are chairman of and ranking on the Senate Aging2028Committee.2029    The House members were the Special Committee on China, so2030that was the area of differences in our questions, but I really2031appreciated the depth of knowledge that each of you have, and2032you have given us great ways that we can work together to2033protect not only the American dream but protect our parents and2034our grandparents to make sure they are not continually targeted2035and absolutely scammed out of their hard-earned dollars and2036their retirement savings.2037    Thank you. I think that your recommendations, Mr. Finta,2038with regard to resources, with regard to collaboration with2039local law enforcement, with regard to creating specialized2040commissions to do this work is very wise and thoughtful. Mr.2041Iacovella, I really appreciated your recommendations with2042regard to how we keep security firms safe. How we keep2043investments by our states to be protected and good investments.2044I think your insights in that is extraordinarily helpful.2045    I think, Mr. O'Leary, your insights with regard to how we2046incorporate how we have laws that protect U.S.-based companies,2047how we allow for U.S. based companies to compete worldwide is2048very important, and I couldn't agree with you more that the2049stability of U.S. markets and the fact that people respect our2050law enforcement and the oversight and accountability that we2051can provide in this jurisdiction is worth everything. It is why2052people want to do business in the United States.2053    Thank you all for being such important leaders, and I2054appreciate all the contributions you made to us and to this2055Committee.2056    The Chairman. Thank you, Ranking Member, and we have got a2057couple--we have got a few House members coming back, but I have2058got another question.2059    I just want to--so Mr. O'Leary, what if there is a company2060called ByteDance and owned a subsidiary called TikTok, and the2061U.S Government made the decision, Congress made the decision2062that they shouldn't do business in our country because it was2063all Chinese propaganda, right, and they were required to sell.2064    Now, if that happened, it would be whatever their free2065market would be. They would sell at some price,--whatever that2066price is, right, but what if the government of China had the2067right to say, no, you can't sell it, and so what happens?2068    What is the spread--now, what would be the spread probably2069in the value of something like that if you say you can't do2070business, you got to shut down in America for the parent2071company, for TikTok, or you can go sell to the highest bidder?2072    What would--so what would be arranged and how--and would2073that be a material disclosure that was not made by the2074underwriters, required by the SEC, enforced by an exchange?2075    Mr. O'Leary. Yes. TikTok is the most unique situation in2076American corporate history because I don't recall ever a2077company having a law written specifically because of the way it2078operates. I mean, I have never seen anything like it and I2079don't think in history we have had anything like this.2080    Not only did Congress pass a law specific to it, but the2081Supreme Court ruled nine to zero in further definition and2082resolution about exactly what was intended by that law.2083However, it has seven million American businesses operating on2084it, generating somewhere between $15 and $17 billion of2085revenue.2086    And in a commercial environment, that is of interest to2087many investors, including me and others, and this is the first2088time I have ever seen a private equity deal basically where the2089actual deal terms are written into a law from Congress and the2090Supreme Court. I don't--I think that is absolutely unique.2091    Now everybody is trying to interpret what these laws are to2092actually do this deal. We have now given a new 75-day period. I2093doubt there will be another one, but I think there will be a2094deal done according to the law because there is value there and2095markets clear at whatever price it has to be.2096    I have heard estimates of as low as $20 billion without the2097algorithm. As high as $40 with it, so who knows? Apparently, it2098is pretty clear to me today after what I have listened to that2099there will be no algorithm in the deal.2100    The Chairman. It is clearly a change in value, right?2101    Mr. O'Leary.. Yes, but you know, it will be open price--the2102great thing about American capital markets, it is an open price2103discovery.2104    Once the rules are placed in place and the investors are2105there, it is going to be negotiated based on whatever the2106clearing price is, and I think that would be an orderly way to2107get this thing done.2108    I mean, I would prefer to see it, and I think it would be2109better for our markets to have the competition of this social2110media platform as long it was operating in compliance with the2111law, but you know, it is--I just have never seen anything like2112it, and I think it is--for me it is a legacy deal of a2113lifetime. It is just--if I am in any way part of the solution,2114I will be very proud because here is how I feel about it.2115    Those seven million small businesses, they are all Shark2116Tankers. They are all second-generation American entrepreneurs,2117and we should protect them. We should make sure they survive2118this whole thing. It is not their fault. It is a shame to shut2119their businesses down. Whether it is lipstick, or clothing, or2120whatever their product or service is, they are generating----2121    The Chairman. It is a business----2122    Mr. O'Leary. Yes.2123    The Chairman [continuing]. and it is shops. There is2124income.2125    Mr. O'Leary. Yes. That is it.2126    The Chairman. Congressman Hinson.2127    Representative Hinson. Thank you. Thank you, Mr. Chairman,2128and to our Ranking Member as well, for hosting this hearing2129over on your side. It is great to be over here. Over and over2130again, we continue to see Chinese companies systematically2131working around and continuing to take advantage of our laws to2132boost their growth while cutting us out of that process.2133    They have been playing long games in this case, and too2134often we have been used and outmaneuvered, and as we have heard2135discussed today many times, American retirements and2136investments have flowed directly into these companies that2137strengthen the CCPs surveillance state and in many cases are2138tied directly to force labor violations.2139    That is why I recently reintroduced my bill, the Protecting2140American Industry and Labor from International Trade Crimes2141Act, which, again, empowers the Department of Justice, gives2142them the tools that they need to better be able to go after the2143bad guys--to detect, investigate, and prosecute these trade2144crimes, especially those that are frequently committed by the2145CCP, duty evasion, transshipment, forced labor violations, all2146the things that we have talked about today that disadvantage2147American workers and American businesses.2148    Mr. O'Leary, my first question is for you today. How do CCP2149state subsidies and the dumping practices that they regularly2150utilize distort our markets, and how do they hurt our domestic2151manufacturers and producers, particularly in rural communities2152like mine in Iowa?2153    Mr. O'Leary. Well, the number one way there is damage done2154is not abiding by IP laws. That is probably the most long-term2155damage that has occurred because it is small increments.2156Undoubtedly, if you go into your constituency and ask2157entrepreneurs over the last 40 years, you are going to find2158many companies that were knocked off in China and nothing was2159done about it.2160    In some cases, they are bankrupt now as a result of--you2161have got to think about something. An American company that2162spends, let's just do small numbers, $10 million in developing2163their product, and all the R&D, and they are going to have to2164amortize that over the life period of maybe five years on that2165product, and they put it on the market, and it immediately is a2166hit.2167    Let's say, that would be defined by five million in annual2168sales. Five million in annual sales, generally, you are going2169to make 15 to 20 percent. You can support a family. You can2170grow the business. The minute that is seen by China,2171particularly if it is a WeatherTech or something so simple that2172could be knocked off--China did not participate in spending on2173the R&D.2174    They didn't participate in developing the mold in some2175cases at all. They simply let the American company prove the2176market and then they knocked it off. If that happened2177stateside, within hours I would shut that down. It would be2178easy. You could hire a local loyal lawyer to do that. Can't do2179it in China.2180    Incrementally over the years, if there is one thing that we2181could change in this current narrative with China would be to2182establish reciprocal IP laws and ways to litigate them and2183resolve complaints, which was intended in 2020 with the WTO2184agreement that they agreed to, and then there would be very2185punitive penalties if that was not abided by, and the best2186penalty is disallowing access to American capital markets.2187    Representative Hinson. In my district, it was actually seed2188that they stole out of our cornfield, so you talk about2189spending billions of dollars on that IP and the R&D that goes2190into it. They were actually caught in an Iowa cornfield trying2191to steal the seed by the FBI, and FBI pursued the investigation2192and tried to hold them accountable. Actually arrested someone2193here in the United States.2194    We need more resources to be able to go after these people2195and actually enforce the trade laws that we do have on the2196books, and of course, protect these key industries from that2197unfair competition, and as you said, they just come in and they2198let us prove the market. They let us do all the work, and then2199they----2200    Mr. O'Leary. I have learned something in the last two years2201you should know, and I speak to everybody in the room on this.2202They don't think there is anything wrong with that.2203    Representative Hinson. It is just how they do business.2204    Mr. O'Leary. That is not taught to them when they are young2205entrepreneurs that there is anything wrong with stealing IP2206because there is no consequence, and the only way--when a puppy2207is being--I don't even want to use that analogy, but you got to2208get the stick out.2209    Representative Hinson. This is about protecting Main Street2210small businesses and those innovators, and so, let's talk about2211the flow of capital going to these companies that are then2212turning around and being used against us. We have talked about2213the fact that they are able to trade on our exchanges.2214    One example, Chinese LiDAR Hesai with links of course to2215the PLA. Also on the DOD blacklist, but they are still trading2216publicly on the New York Exchange. I actually sent a letter to2217Nasdaq last year asking why are they allowed to continue to do2218this and remain listed.2219    I want to thank the chairman for his leadership in the2220Senate on this issue as well, and we have tried to hold them2221accountable here and try and limit this, but given these very2222clear national security concerns, Mr. Iacovella, why are they2223still allowed to trade on our markets when we know so very2224clearly that these dollars are being used against us?2225    Mr. O'Leary. Hopefully with a new sheriff in town, 48 hours2226from now, they won't be and I really hope that happens. I will2227certainly do a shout out for him when he gets confirmed. I2228mean, this is somebody that should be enforcing the law because2229this is what maintains trust in the system, and I hope it2230happens, and there will be very little consequence to public2231markets if--it will be a big wake up call. Other exchanges will2232look at this, and I think there will be a reaction--and China2233domestically to get on board.2234    Representative Hinson. Mr. Iacovella, did you have anything2235you would like to add there too--since we were talking about2236it.2237    Mr. Iacovella. No, I think Mr. Atkins will enforce the2238holding Foreign Companies Accountable Act and the Accelerating2239and Holding Foreign Companies Accountable Act, and we will have2240some--a real understanding of what the audits were supposed to2241be during the period when China was on lockdown and supposedly2242the PCOB went over there and conducted audits into their2243auditing firms.2244    There was a number of state secret privileges that2245prevented them from doing what they needed to do, and I think2246that Mr. Atkins isn't going to tolerate that, and hopefully2247these companies that have been on for almost two years now that2248are non-compliant will start to be removed.2249    It is possible that the exchanges are seeing the wind shift2250and that they can take their own regulatory action and get2251these people off the exchanges because there is no reason for2252them to have access to our capital markets.2253    Representative Hinson. Thank you. Mr. Chairman, thanks for2254the indulgence. I yield back.2255    The Chairman. Congresswoman Tokuda.2256    Representative Tokuda. Thank you, Mr. Chairman. Thank you2257for your patience while we were voting on the House floor. You2258know, over 73 million Americans across the country,2259predominantly seniors, depend on the Social Security2260Administration services, and yet the Social Security's website2261has been crashing repeatedly over the past few weeks. Outages2262have lasted as long as a day in some cases.2263    Other issues include confusing messages claiming that SSI2264recipients were currently not receiving payments, and all of2265this comes at a time when this Administration is rolling out a2266new policy for identity proofing that will require millions of2267beneficiaries to set up an account online or show up in person,2268adding to the confusion.2269    Now, we know why this is happening. In the past few weeks,2270Elon Musk and DOGE have cut over 7,000 jobs from the Social2271Security Administration and are planning more, including a 502272percent cut to the agency's technology division responsible for2273its website and other online platforms. Last year, during the2274massive CrowdStrike outage, we saw an uptick in online scams to2275take advantage of the situation at hand.2276    Our own Department of Homeland Security put out a bulletin2277warning of increased phishing and malicious activities. My2278concern is that DOGE's reckless efforts to cut Social2279Security's technology division and roll out sweeping new2280policies that require seniors to go online are creating that2281same opening for scammers to take advantage of seniors and2282threaten their hard-earned benefits.2283    Mr. Finta, would you agree that the instability in Social2284Security's website presence and online platforms is creating2285unnecessary uncertainty among our Nation's seniors and others2286who depend on Social Security, and creating opportunity for2287China to both spread propaganda and for scammers to use this as2288an opportunity to exploit our elders?2289    Mr. Finta. Ma'am, that is not my area of expertise in terms2290of the markets and the confusion----2291    Representative Tokuda. Okay, but you deal with preventing2292fraud and abuse among seniors.2293    Mr. Finta. Yes.2294    Representative Tokuda. Right now our seniors who are2295finding concern about their Social Security benefits as a2296result of mixed messages. They are getting online and proof of2297authentic--their identity.2298    Mr. Finta. Confusion does tend to support criminal2299activity, if that is what you are getting at, ma'am.2300    Representative Tokuda. I think what I am getting at is that2301if seniors are worried right now that they may not be getting2302their payments because they have actually gotten email messages2303that were incorrect, that they have to make changes, they have2304to go in person or create online platforms--and in rural2305America like where we live, you can't always get physically to2306a site.2307    If you have this opportunity present itself to scammers--2308scammers are often looking to exploit situations like when2309people are scared, or when there are changes in systems or even2310changes in updates to malware and whatnot. Do you think that2311this potentially could create an opportunity for them to2312exploit seniors given the confusion and actually the lack of2313staff?2314    As was mentioned at the very beginning of the hearing,2315people won't even necessarily get someone answering the phone2316for hours if they call for help to Social Security. Is this a2317potential opportunity for scammers that we are seeing right2318now?2319    Mr. Finta. There is no doubt in my mind that given the2320opportunity, transnational organized crime groups would take2321advantage of that situation.2322    Representative Tokuda. If we had a situation where we are2323actually cutting tech staff that helped to maintain these2324platforms, are we not creating a more vulnerable and2325environment for scams on our seniors and our Social Security2326beneficiaries?2327    Mr. Finta. I don't disagree with that statement, ma'am.2328    Representative Tokuda. Okay. I see that I have used quite a2329bit of my time. I did want to move on to reports that we saw in2330February from Wired that reported at least eight scam compounds2331in the Myanmar, Thailand border region were using SpaceX2332Starlink terminals to connect to the internet and to carry out2333their operations.2334    Between November 2024 and February 2025, there were over233540,000 logins to Starlink from known scam centers in the2336regions. I think Ranking Member Krishnamoorthi was actually2337pointing some of those out.2338    Mr. Finta, from your work protecting American seniors from2339fraud and other forms of financial exploitation, as well as2340your law enforcement background, how important is it that2341companies like SpaceX and Starlink, and other companies2342providing similar technology, develop robust processes to crack2343down and be an ally on trying to prevent these kind of abuses2344of their systems that target American elders and retirees?2345    Mr. Finta. Ma'am, it is my experience that these companies2346do have anti-fraud and vulnerable persons programs, and they do2347work toward those efforts. Individually, it is difficult for2348those companies, in my opinion, to have that kind of success as2349much as what we could if we had an all of government or an all2350of society approach toward supplementing those efforts. I am2351not specifically familiar with the Starlink----2352    Representative Tokuda. Okay. Well, it seems that we--there2353are actually a growing number of vendors that are openly2354advertising Starlink access as a solution for online scam2355operators, so we clearly need to work closer with them to make2356sure that we prevent and stop this fraud and abuse on our2357senior population. Thank you very much, Mr. Chair. I yield2358back.2359    The Chairman. Thank you. Congressman Barr.2360    Representative Barr. Thank you, Mr. Chairman, and Mr.2361Chairman. thank you for this unusual, unique, but very2362important bicameral hearing I think which underscores the2363threat that we face here.2364    In February, President Trump issued the America First2365investment policy memorandum that directs federal agencies to2366address outbound investment into China. Congress has been2367focused on this issue in multiple Congresses, and in this2368Congress, I have introduced the Fight China Act, formerly known2369as the COINS Act, to prevent outbound investments into Chinese2370military and surveillance companies.2371    The Fight China Act also aligns with the President's2372memorandum by taking both an entity-based approach, and a2373technology-based approach. This is important because sanctions2374do provide a multilateral effect, but not all civil military2375fusion happens with just listed entities. We have seen quite a2376bit of venture capital and private equity flows into private2377non-listed entities and therefore a technology focus is2378important.2379    Mr. Iacovella, can you discuss why a law that prohibits2380U.S. outbound investment into both specific entities is needed,2381but also clearly defined technologies of national security2382concern. Why is that second piece so important?2383    Mr. Iacovella. Thank you for the question, and we supported2384your legislation, and we liked the approach that you have taken2385because we always thought that you can do--you can turn up the2386dial on specific companies, but you needed to attack the entire2387sectors that are posing a national security threat.2388    There is more than just public capital, as you said, that2389is going over there. It is private capital, venture capital,2390private equity, and public capital that is going over there,2391but what is even more of an issue is that you have companies2392that are subsidiaries, of subsidiaries, of subsidiaries.2393    Maybe the parent is on one of the DOD lists or the entity2394list, and you can't get to them unless you prohibit the2395sectoral investment in those Chinese companies, and so, I2396appreciate your approach. I think you have threaded the needle2397there and we strongly support it.2398    Representative Barr. We want to give the private sector the2399red light, green light approach, but we think we can get at2400this problem and accomplish that by clearly defining the2401technologies of concern.2402    Mr. O'Leary, the Fight China Act, this bill that I have2403introduced, requires the Treasury Department to regularly2404review whether companies on U.S. Government blacklists, such as2405commerce export controls, sanctions, DOD lists, whether they2406should be added to this treasury CMIC list, the investment2407blacklist for Chinese military industrial firms.2408    List coordination is necessary to ensure we treat entities2409consistently. Can you touch on how alignment within these2410various government prohibitions of Chinese entities eases the2411compliance burden for U.S. firms to determine whether or not2412they can invest in China?2413    Mr. O'Leary. Yes. That is one of the great challenges. You2414don't want to go through the cost of starting a deal or an2415investment and doing the diligence on it only to find out that2416it is going to breach this law.2417    It is almost like a CFIUS issue. You don't know the outcome2418till you test it, and so, if there was a better way to do that2419where--particularly in a larger transaction, where they could2420just come to staff and say, look, we are we want to invest one2421billion in this thing, is it going to pass or not, or do we2422actually have to test it? Yes.2423    Representative Barr. We have a provision in the bill that2424would allow for that guidance----2425    Mr. O'Leary. That would be the very best thing to do,2426because then on a no names basis, you can just go in and say,2427look, there is a very material transaction. If you are not okay2428with it, just tell me now. Because nobody wants to burden it2429with litigation, which has been a problem lately, is not the2430answer. Just yes or no, right. That is much easier.2431    Representative Barr. I think we have threaded that needle2432by not having a reverse CFIUS, but it is a clear red light,2433green light system there. Mr. Iacovella, in your testimony you2434refer to passive index loophole, and state that there are more2435than 2,000 U.S. mutual and exchange traded funds that have $2942436billion invested across Chinese stocks and bonds. The concern2437obviously is that American investors may be unwittingly2438financing the Chinese military industrial complex. Can you2439explain how the Fight China Act would curtail that loophole?2440    Mr. Iacovella. I think the Fight China Act would go a long2441way to curtailing the loophole, but I also think that there2442needs to be a straight prohibition because what you will find2443is that New York lawyers are going to come down here and they2444are going to try to create loopholes to the loophole, and they2445are going to interfere with what it is that you are trying to2446do, which is very novel in stopping our money from going and2447funding the Chinese Communist Party's technological and2448military rise, as well as their funding of the surveillance2449state, which aids and abets the interment of Uyghurs. I think2450that your bill does a lot, and I think that it goes a long way,2451but it needs to be much broader because the CCP owns a stake in2452everything.2453    Representative Barr. All right, thank you. Yield back.2454    The Chairman. Thank you. Congresswoman Brown.2455    Representative Brown. Thank you, Chairman Moolenaar,2456Chairman Scott, Ranking Member Krishnamoorthi, and Ranking2457Member Gillibrand for holding today's hearing, and thank you to2458our witnesses for being here.2459    The topic of today's hearing could not be more urgent. I2460represent Ohio's 11th District, home to tens of thousands of2461seniors and retirees who have worked hard, saved, and invested2462for decades. They deserve to know their hard earned savings are2463safe, not evaporating overnight because of a trade war, or at2464risk from foreign adversaries and fraud.2465    Today's threats include everything from shadowy financial2466schemes backed by the Chinese Communist Party, to sophisticated2467online scams preying on older Americans. These threats require2468a whole of government and whole of society response.2469    I want to take a moment to acknowledge the essential work2470of federal agencies like the Consumer Financial Protection2471Bureau, the Federal Trade Commission, and the Department of2472Justice and the FBI. These agencies are on the frontline2473fighting fraud and financial abuse targeting older Americans.2474The CFBP has proposed bringing big tech and non-bank payment2475platforms under federal supervision, something that is long2476overdue.2477    Scammers use these peer-to-peer apps to target seniors, and2478these platforms operate in a regulatory gray zone. The Bureau's2479rulemaking would make--would help close the dangerous2480loopholes.2481    The FTC has also shone a light on scams like romance fraud,2482tech support, cons and crypto related schemes, while DOJ's2483Elder Justice Initiative has gone after the criminal networks2484behind them. This rise in fraud through payment apps and other2485digital tools is staggering, and these platforms still fall2486outside traditional oversight.2487    That is why the CFB's proposals matter. Mr. Finta, given2488how much elder fraud is occurring on these platforms, how2489urgent is it for Congress to support CFB's efforts and close2490the regulatory gap? And what additional safeguards should we2491look at to protect seniors as these tools continue to evolve?2492    Mr. Finta. I appreciate the question, and you are correct.2493Each of those agencies has a role to play in the overall2494process of not only preventing frauds but going after the folks2495that do propagate them. I think that is one of the big things2496that gets lost in the shuffle here to some degree, is the lack2497of enforcement overseas where a lot of these folks feel like2498there is no consequence.2499    They are never going to get caught, and that disincentive2500is incredibly important in the overall plan, the structure. I2501actually had a conversation with an Indian journalist one time2502who said, you have to arrest enough people that they think they2503might be the next one, and that has to happen for this thought2504process to work. Now, in terms of the regulatory side of2505thinking, again, that is outside of my area of expertise.2506    However, the regulators in this country, along with the2507enforcers, and private industry, all have to be on the same2508page for this to actually work. They need to support each other2509because $61 billion a year leaving the country out of our2510elders' accounts and going to foreign countries, some of which2511you are adversaries, is no trivial amount.2512    Representative Brown. Thank you. Instead of closing the2513door on scammers and fraudsters, Republicans want to reopen it2514and let them in by overturning the CFBP's rule to regulate2515payment platforms.2516    I am glad that all Senate Democrats voted against2517overturning this Biden Administration rule and I will do the2518same next week. Still, the scale of the threat demands more.2519The FBI reports that Americans over the age of 60 lost more2520than $3.4 billion to fraud in 2023, up 11 percent from the year2521before.2522    We know that this is likely an under count because many2523cases go unreported out of fear, embarrassment, or shame. These2524tactics from pig butchering, crypto scams, to grandparent2525schemes are designed to be deeply personal and emotionally2526manipulative.2527    At the same time, many seniors' retirement savings are2528being funneled into CCP linked firms, often without their2529knowledge through passive investment structures. That includes2530companies using corporate shells designed to evade both China's2531and U.S. investment protections, and firms tied to military and2532surveillance industries through CCP's made in China 20252533strategy.2534    We need to shed light on these investments and make sure2535our system isn't helping the Chinese Communist Party exploit2536retirees. That means increased transparency for investors and2537it means greater support for federal enforcement. Mr. O'Leary,2538with my few minutes, you spoke about how millions of Americans2539are unknowingly exposed to Chinese--through Chinese firms2540through passive index funds.2541    What specific steps can Congress take to help investors,2542especially seniors, clearly understand where their retirement2543dollars are going?2544    Mr. O'Leary. To ban the use of VIEs, which are a structure2545used for what I would call a faux share. These get indexed. In2546other words, you think you own a stock certificate with a2547voting right to it when you don't. It goes to a Cayman2548structure. I don't know why we would allow that to go into2549anybody's pension plan. I mean, this is a shadow share is what2550it is, and yet we allow it.2551    The other is to actually just enforce existing laws around2552the golden share. Because, you know, if you hold a company,2553just to make an easy example, if you have $100 in an index fund2554and you have got 10 companies, $10 in each one, and one of them2555just goes to zero--and there is many examples of these Chinese2556golden share companies just going to zero and you don't know2557why.2558    You have basically lost. The value of that index is now2559$95, and why put it in there in the first place? Even if the2560law allows to have--I don't know how that is going to happen,2561but you know, we have been talking today about de-listing all2562these companies, and I think that might be happening soon.2563    Sprinkled out throughout all of our indexing, and all of2564our pension, and all of the diversification through the system2565that we have built that has protected seniors' investments for2566decades, we have let this cancer creep into it, and to stop2567this is to simply enforce existing laws and add new ones. I2568don't want to own a VIE if I am an indexed pensioner. Why would2569I want to own that?2570    A Cayman shadow share from a company with a super2571preference. I mean, it is so just not what they should own that2572we just should say sorry, you know. The answer is no, you can't2573put that in this index. It is just a simple applying these2574existing laws and fine tuning to remove the tumor that is in2575there.2576    This is a cancerous tumor in our financial services system,2577and we have good doctors here, so chop, chop. Let's just cut it2578out.2579    Representative Brown. My time has expired. Thank you for2580your courtesy, Mr. Chairman, and thank you, Mr. Wonderful.2581    The Chairman. Thank you. Chairman Moolenaar.2582    Chairman Moolenaar. All right, thank you. Mr. O'Leary, just2583to followup on that discussion. The Trump Administration is2584having an ongoing review of ERISA standards to ensure that2585foreign adversary companies are ineligible for pension plan2586contributions. You have been talking a lot about these issues,2587the lack of investor safeguards, you know, geopolitical risk,2588the lack of the ability to due diligence on some of these2589things.2590    You just mentioned the, you know, shadow shares, and I2591guess, you know, when you talk about VIEs--what percent of2592investors are even aware of this? What percent of financial2593advisors or people in this business who are advising seniors2594would even be aware of this? I think I would like to ask all of2595you this question.2596    Mr. O'Leary. You know, the majority of index funds or ETFs2597are administered by fiduciaries inside large distribution2598companies like Fidelity or Schwab, and they just--their job is2599to be compliant, and so, it is very rare that they ever go2600rogue and put anything into an index that is not permitted by2601law, and so, it is just a matter of making sure that we give2602them good definition of what is not permitted, and they will2603comply--99 percent of them will comply.2604    We built in great safeguards for this stuff. We just2605haven't really implemented or made them obvious enough. Because2606when you ask how many investors, if I took 10 people in the2607hall outside here and asked them, do you know what a VIE is?2608They would say no. Do you own one? I have no idea what that is.2609It is not a real share, and it is--we have let Chinese2610companies rig or take advantage of the system we have provided2611and the lack of enforcing it to get to this extreme point.2612    I don't know the exact amount. I am going guess,2613guesstimate how many Chinese companies are listed on Nasdaq and2614NYC. I am going to guess between $700 and $800 billion worth of2615market cap. A majority of them should be delisted if we enforce2616the laws as they should be enforced, and many of them, in my2617guess, would say, wait a minute. I am sorry I didn't get it2618done in the last 24 months, but I am going to hire American2619counsel. I am going to--I am going to get compliant, and it2620would be a great first step because you would force the2621transparency.2622    Then the--you know, the--you know, I used to be in the ETF2623business. Every single firm that distributed, we had to go2624through the whole compliance process. It cost millions of2625dollars, but the system works. If you want to index, you got to2626make sure that you know what you are putting in there because2627other people are relying on that and trusting you to do it.2628    We have been talking all day about how we are actually2629eroding the system by not enforcing these laws because people,2630when they start to learn about shadow shares and VIEs, are2631saying, what the hell is this stuff? Like, why is it in here?2632    Chairman Moolenaar. I am--I guess what I am wondering is,2633let's say, you know, I am someone who has an account at2634Fidelity or some other, and I go to my financial advisor, and I2635am trying to get advice on this. Would they even know VIEs, or2636would they just simply say----2637    Mr. O'Leary. No, they rely on their compliance departments.2638Some do. Some, you know, RAs and some advisors do but not many.2639They just rely on the system, and so, you got to make sure the2640system works.2641    Chairman Moolenaar. Yes. You got to change the system.2642    Mr. O'Leary. Yes.2643    Chairman Moolenaar. Okay. Mr. Iacovella.2644    Mr. Iacovella. Yes. If VIEs are in an index fund, then it2645is the obligation of the fiduciary to track the index fund, and2646that is what they do, and the CCP, it has been reported, they2647pressured MSCI and others to actually expand the percentage of2648Chinese companies that go in these index funds, and they will2649continue to do it, and the VIE structure, there is no economic2650rights. There are no voting rights. There is no control over2651the board, and then these companies get to list in our2652marketplace.2653    One of the largest risks that we haven't talked about. If2654Kevin sells his shares of his public company, what do you have2655to do? You have to disclose it immediately, right. They don't2656have to do that.2657    A foreign insider can sell all of their shares in the2658company from day one to day two and you are not going to know2659about it until the stock price just keeps going down and2660information leaks out. Who gets harmed by that?2661    Chairman Moolenaar. Thank you. I yield back.2662    The Chairman. Congressman Stanton.2663    Representative Stanton. All right. Thank you very much,2664Chairman Scott and Ranking Member Gillibrand, and of course,2665Chairman Moolenaar from the House side, and Ranking Member2666Krishnamoorthi. This is a very important hearing. I am glad2667that you made the time to host us here today.2668    I represent the State of Arizona, which is the state that2669has the unfortunate distinction of having the highest rate of2670elder fraud in the United States of America. In 2022, more than26713,500 Arizonans were scammed out of $82 million. That is just2672the scams we know of. Many seniors never report that they have2673been victimized.2674    The U.S. Government has identified that organized crime in2675the people's Republic of China are some of the most2676sophisticated perpetrators of financial fraud. In fact,2677according to the United Nations, the majority of pig butchering2678scams where fraudsters take their time to earn the trust of the2679victims and dupe them into sending increasingly larger amounts2680of money are perpetrated by these Chinese criminal networks.2681    They prey on fear and isolation. They pose as investors2682promising lucrative returns, tech support, law enforcement,2683romantic partners, friends and family members, and thanks to2684the increased use of AI, which can mimic human voices, these2685scams are becoming more elaborate, more convincing, and harder2686to detect. The Federal Government needs to do more in2687coordination with our international allies to crack down on2688these criminal enterprises and protect seniors.2689    Mr. Finta, you have spent two decades at the FBI working on2690transnational organized crime. You testified here this morning2691that U.S. law enforcement does not have the resources to2692effectively pursue complex transnational elder fraud cases. You2693may have already covered this, but cover it again. It is worth2694covering again.2695    Give us a better description of the resources that the2696Elder Justice Task Force needs now more than ever, especially2697in light of--especially as law enforcement tries to keep pace2698with criminals' use of AI and other evolving technologies.2699    Mr. Finta. I appreciate that. I would like to clarify that2700the FBI, HSI, Secret Service, IRS--all have very capable agents2701who can and do these investigations on a regular basis. The2702issue there is the volume. It is the number, and while you are2703working a 18-month, 24-month investigation, during that time,2704there are thousands, and thousands, and thousands of people all2705being scammed and defrauded during that timeframe and losing2706their life savings.2707    It is not that it is beyond our capability. It is beyond2708the resources in terms of the fire hose in the face of these2709investigations, and yes, if the individual agents, and2710officers, and investigators are working these cases, as you2711work it, you gain more intelligence, which means you need more2712subpoenas, which you need more time, and you need more2713analysts, and it grows like that giant spiderweb we always see2714on the wall in TV.2715    The issue here is the aggregation of those cases2716essentially with the private sector to grow those cases quickly2717and effectively so you can do more of them to provide that2718disincentive. I don't think we are going to be able to rest our2719way out of this problem, but I think it is a giant factor that2720could contribute to reducing it over time.2721    Representative Stanton. Okay. I appreciate the point. Well2722made. These last few days have been incredibly volatile with2723the stock market down more than 10 percent, with the change in2724tariff policy.2725    It is coming back up today, thank goodness, but especially2726for our seniors who may be living off of their retirement2727accounts, that volatility is scary, and fear is something the2728scammers prey off of. As fear grows, scammers will find easier2729targets. As retirement accounts shrink scammers will find--will2730land harder blows.2731    Mr. Iacovella, can you speak to how fraudsters, how they2732target American retirement accounts, and how falling victim to2733one scam will too often make you a target for the next one?2734    Mr. Iacovella. Yes, that is exactly right, Congressman.2735The--one of the things I would like to follow on with what Mr.2736Finta said is that the public-private partnership in this area2737is crucial.2738    We need to be able to tell the government exactly how we2739are being attacked, who is attacking us, and what different2740sophisticated technologies they are using and methods that they2741are using in order to get at our customers. Because it is our2742customers who they are attacking. They get in their emails.2743They reset rules in the emails. They redirect things so people2744don't even understand what is happening, and it even looks like2745to our membership that it is coming from their customers.2746    Then once the customer is scammed, people know about it,2747and somebody else comes in who probably was part of the2748scamming and says to them, hey, if you just pay me a thousand2749dollars, I will help you to try to recover some of the funds2750that just left the country. That is the first piece, and then2751it just drags on for a little while longer. Then you get2752another thousand, and another thousand.2753    Before you know it, they are out another $10,000 or $15,0002754by the same people, and they don't get their money back, and2755they have been scammed again, and that is exactly what you are2756talking about, about follow on.2757    Representative Stanton. Thank you very much. Looks like Mr.2758O'Leary may have--were you going to jump in and answer on that2759as well? Okay. I yield back.2760    The Chairman. Thank you. I would like to thank everyone for2761being here today and participating in this incredibly important2762discussion on the threats posed by the Chinese Communist Party2763on U.S. investments. Here is the takeaway for everyone,2764especially American seniors.2765    Make sure your dollars are not invested in Communist China.2766I look forward to continuing to work with members across the2767aisle and down the dais on this very important topic, and hope2768that today's hearing will resonate with the millions of2769Americans approaching retirement to take action today to make2770sure their hard earned money is safe.2771    If any members have additional questions for the witnesses2772or statements to be added, the hearing record will be open2773until next Wednesday at 5:00 p.m. I thank each of you.2774    [Whereupon, at 5:01 p.m., the hearing was adjourned.]27752776?27772778=======================================================================27792780                                APPENDIX27812782=======================================================================27832784?27852786=======================================================================27872788                      Prepared Witness Statements27892790=======================================================================27912792?27932794                 U.S. Senate Special Committee on Aging27952796    "Financial Aggression: How the Chinese Communist Party Exploits2797          American Retirees and Undermines National Security"27982799                             April 9, 202528002801                      Prepared Witness Statements28022803                             Kevin O'Leary28042805    Chairmen Scott and Moolenaar, Ranking Members Gillibrand2806and Krishnamoorthi, members of the Senate Special Committee on2807Aging and the House Select Committee on the Chinese Communist2808Party, thank you for inviting me to participate in today's2809important hearing. I want to use my opening statement to shine2810a light on an issue that impacts millions of American2811investors, many of whom have invested their retirement funds in2812the equity markets. The threats posed by the Chinese Communist2813Party I will discuss today, impact anyone like me who has tried2814to do business in China, everyone that invests in the stock2815market, anyone that invests in passive investment vehicles like2816international index funds or mutual funds, any retail investor2817that invests in Chinese companies, anyone who invests2818intentionally in emerging markets like China, and everyone with2819a 401k plan or pensions invested in international index funds.2820Of course, millions of American seniors fall into one or more2821of these categories.2822    I've been a businessman, a private equity and venture2823capitalist, my entire adult life. I started a software company2824in 1986 and at one point owned such popular IPs as the Oregon2825Trail, Carmen Sandiego and Reader Rabbit before I sold the2826company for $4.2 billion in 1999. I now maintain a portfolio of2827investments in a number of businesses in multiple sectors of2828the economy held though Private Equity and Venture Funds. I2829like to think I know what a good deal is. I certainly know what2830a bad deal is, and investing in China under the current2831reciprocal imbalances is a very bad deal.2832    I have nothing against the Chinese people. Their2833contributions to science and art over the millennia are well2834documented. They are wonderful people and incredibly talented.2835Many of my team members in my operating company are of Chinese2836or Asian descent. It's their Government I take issue with. In2837my opinion, since joining the WTO in 2000 the Chinese2838Government has never played by its rules. The Chinese Communist2839Party has the ability and the desire to exercise total control2840over its people and their companies - and anyone else who wants2841to do business with or operate inside its territory. This has2842led the CCP to passing various laws in the realm of2843cybersecurity, espionage, intelligence, and beyond, and other2844mechanisms to control its corporations, industries, and2845business partnerships, all to the detriment of US investors.2846    This is not a new phenomenon - it has been part of the2847long-game China has been playing for decades. We just are slow2848to wake up to these harsh realities and even slower to change2849our behavior. But the time for change is now - before it is too2850late and billions of dollars of wealth our current seniors and2851future retirees are counting on are wiped out.2852    Let me just elaborate briefly on a few reasons why the time2853for us to address this matter is TODAY.2854    A new buzzword started going around at the start of the2855year - "Golden Share." Well, not only is it a buzzword, but it2856is also a problem and exemplary of all the risks to investing2857in Chinese securities. In its desire to reduce state-run2858companies, the Chinese government divested itself from them,2859sort of - but retained these golden shares, or "special2860management shares" as it is officially called, as a means of2861continuing to control these entities while it officially2862divests themselves from the company. In return for taking a 1%2863share in the company, or all their subsidies, the government is2864granted a seat on the board, voting power and influence over2865all business decisions. Whether divested for financial reasons2866or optics, there is nothing good that comes from investing in a2867company with special management shares reserved for the Chinese2868Communist Party. As America's former Secretary of State rightly2869noted, "in China, there's really no distinction between private2870companies and the state."\1\2871---------------------------------------------------------------------------2872    \1\ https://www.cbsnews.com/news/antony-blinken-face-the-nation-2873transcript-02-19-2023/2874---------------------------------------------------------------------------2875    We see the use of Golden Shares as China uses that to2876control new media companies and tech companies. As of 2023, 37%2877of companies listed in Shanghai and Shenzhen had amended their2878charters to formalize the role of party committees inside the2879companies. This is in addition to China's 2017 National2880Intelligence Law which requires all firms in China to accede to2881government demands to provide information and data as2882authorities deem necessary to protect China's national2883security.2884    If China maintaining control of companies wasn't bad enough2885for investors, China prevents foreigners from owning Chinese2886companies. Instead, they've cleverly exploited the U.S.2887financial system's creation of Variable Interest Entities2888(VIEs) to approximate the owning of corporate shares. If you2889own stock in a company like Tencent, Alibaba, or the ICBC you2890don't actually own stock in a company. You own a share of a2891contract of something in the Cayman Islands that is trying to2892approximate stock ownership. Investors are buying in the VIE2893investment structure that relies on a contractual arrangement2894with the parent company to allow a foreign investor to control,2895but not directly own, the operating company. I estimate that289690% of Americans who hold these companies in their portfolios2897have no idea that this situation exists.2898    Congress has passed a law to try to solve this problem,2899yet, the problem persists.2900    The U.S. has given China preferential treatment for over a2901decade through its own special MOU that governs accounting2902standards and oversight. This sweetheart deal with the Public2903Accounting oversight Board (PCAOB) has allowed China to2904continue to game the U.S. financial system via their special2905treatment that is not afforded other countries - even our2906allies. Despite efforts to update these accounting agreements,2907it is no fairer to do business with China; there is no reliable2908rule of law, no reciprocity for Western businesses to be2909treated in China how the West treats Chinese businesses, no2910consequences for IP theft, or market access. This is a2911completely unbalanced and non-reciprocal situation. Why do we2912allow this? How can this be in any way viewed as fair to2913American investors?2914    What's worse, is these investment schemes all benefit2915China's core industries - their "Made in China 2025" benchmarks2916that channel investment into priority sectors that underpin2917their national military-civil fusion strategy. So, by investing2918in China, Americans are propping up their military,2919surveillance state, industrial capacity that operates off of2920unchecked environmental spoilage, slave labor, forced organ2921harvesting, and gross human rights violations. Not to mention2922that these companies are the very ones that then destroy U.S.2923jobs and industries through their corporate espionage, IP2924theft, dumping, trade crimes, and more. None of these are good2925things to be invested in, and even more so, if the investment2926itself isn't sold, there is every reason to change course and2927protect your assets.2928    At the end of the day, the American investor owns nothing2929and there is nothing stopping China from voiding out this2930agreement.2931    Every American has exposure to China in their 401k's and2932retirement accounts. If you invest in an Emerging Market Index2933Fund, about 25% of your fund is invested in China. If you2934invest in a Total International Index Fund, about 10% of your2935fund is invested in China. If China goes to war with Taiwan,2936those investments could go to zero. A retail investor that buys2937shares of Ali Babb because they think it'll be the next Amazon,2938does not actually own the stock. Should we allow a retail2939investor to buy fake shares of a real company? Should a retiree2940potentially lose 10% of their international equity portfolio,2941when it is 100% preventable?2942    I'm glad this hearing is happening today and there is2943bicameral and bipartisan interest in solving the problem. We2944can fix the problem. There should be complete parity with the2945US and China, but we need to act NOW to protect US investors2946and the federal government. I believe Congress should act to:29472948      Delist CCP-affiliated companies until there is parity of2949treatment for Western businesses in China. If we can't own2950stocks in their country, they should not be allowed to own2951stocks in the US. Unless businesses can operate in China with2952the same freedoms that Chinese businesses have, we should not2953let their businesses operate in the U.S.2954      We should exit China's marketplace until the CCP makes2955significant reforms.2956      We should demand that all Chinese companies engaged in2957US markets comply with US accounting standards.29582959    For decades across multiple administrations, we have2960discussed leveling the playing field with China, instead the2961situation has only gotten worse. Make no mistake, I want to do2962business in China as so do millions of other investors and2963companies, but we want a reciprocal ecosystem that is2964transparent and where all parties play by the rules mutually2965agreed upon. I want access to the Chinese legal system so trade2966and IP grievances can be litigated and resolved. The Chinese2967enjoy these rights in the US. Why do we not have them in China?2968Lately there has been a lot of rhetoric during negotiations on2969who holds the "cards". The US is still the world's largest2970market supported by the world's largest economy under the rule2971of democratic law. That's why so much of the world's capital is2972invested here. That's a lot of leverage, lets fix this Chinese2973problem while we still hold the cards.2974    I look forward to a robust conversation today and answering2975any questions you may have.29762977                 U.S. Senate Special Committee on Aging29782979    "Financial Aggression: How the Chinese Communist Party Exploits2980          American Retirees and Undermines National Security"29812982                             April 9, 202529832984                      Prepared Witness Statements29852986                         Christopher Iacovella29872988[GRAPHIC] [TIFF OMITTED] T0494.00129892990[GRAPHIC] [TIFF OMITTED] T0494.00229912992[GRAPHIC] [TIFF OMITTED] T0494.00329932994[GRAPHIC] [TIFF OMITTED] T0494.00429952996[GRAPHIC] [TIFF OMITTED] T0494.00529972998[GRAPHIC] [TIFF OMITTED] T0494.00629993000[GRAPHIC] [TIFF OMITTED] T0494.00730013002[GRAPHIC] [TIFF OMITTED] T0494.00830033004[GRAPHIC] [TIFF OMITTED] T0494.00930053006                 U.S. Senate Special Committee on Aging30073008    "Financial Aggression: How the Chinese Communist Party Exploits3009          American Retirees and Undermines National Security"30103011                             April 9, 202530123013                      Prepared Witness Statements30143015                              Brady Finta30163017    My name is Brady Finta and I am the Founder of the National3018Elder Fraud Coordination Center. I'm honored to be here to3019contribute to this very important discussion. I believe the3020scale of fraud against America's elders has grown to epidemic3021proportions and it is time we, as a country, treat it as such3022with a proportionate response.3023    I spent 23 years as an FBI agent, predominantly3024investigating and supervising Transnational Organized Crime3025cases. When my assignment exposed me to elder fraud, I was3026comfortable, as the cases were simply Transnational Organized3027Crime cases under a different name. What I was not prepared for3028was the volume. Just in my limited territory of San Diego3029County, I was inundated with elder fraud complaints without3030adequate resources to impact the threat. No one has that level3031of resource. Even after standing up the FBI San Diego Elder3032Justice Task Force alongside the San Diego District Attorney's3033Office, and bringing forward our very first successful RICO3034prosecution, our ability to make a dent in this crime problem3035was minimal, particularly as we were only able to address less3036than 1% of the available leads. Based on my experience, and3037conversations with partners across the country, I believe only303810 to 15% of the elder fraud victims ever report the crimes3039against them. Even with this low percentage, the volume of3040complaints is still far too large to investigate under the3041current circumstances. Elder fraud and scam cases are not easy3042to investigate and are incredibly time-consuming. They3043literally span the globe, combining organized crime groups in3044foreign countries, with regional organizers, co-conspirators3045and mules in the United States. Laundering the proceeds of this3046crime runs the gambit from cash to gift cards, to wire3047transfers, to digital currency. The scams encompass everything3048from feigned love to fear and are highly effective. For the3049most part, the complexity of the cases, combined with their3050innate jurisdictional challenges and resource requirements,3051limit their investigation and prosecution to federal entities,3052further straining those resources. In just one very typical3053case I oversaw, we had scammers in India working regional3054organizers in the Bahamas, mules in the Dominican Republic and3055the United States, and Canadian and Chinese organized criminals3056laundering the proceeds. The international nature of these3057scams makes it extremely difficult for law enforcement and3058prosecutors alike to hold these criminals accountable and3059attempt to provide restitution for victims. It gets even more3060difficult when the country where the crime ring is based is3061uncooperative with U.S. based law enforcement. While this3062hearing is intended to focus mainly on China, I want to3063emphasize that this is a larger issue that we currently do not3064have the resources to effectively pursue.3065    This threat touches all of us. I would venture to say3066everyone in this chamber has a story of a loved one, an3067acquaintance or co-worker who was victimized; both my parents3068were victims. My mother did not even want to tell me based on3069embarrassment and believing, "There's nothing anyone can do3070anyway." There is always something we can do. The FTC's3071estimate that the annual losses to this scourge are3072approximately $61 billion and the FBI's statistics that show a3073huge increase in these complaints over the last few years3074further underscore that the time is now for a more dramatic3075response, a whole of society response.3076    As a country, we have created national task forces of3077local, state, and federal agencies to combat illegal narcotics,3078child exploitation, and terrorism. Our parents and grandparents3079deserve the same. In addition, we could make these Elder3080Justice Task Forces more effective by supporting them with the3081power, speed, and agility of the private sector. Beyond3082continued education campaigns, information sharing and new3083preventative efforts, a true public/private partnership which3084combines law enforcement with the many robust anti-fraud3085efforts already part of so many companies across the United3086States could create real impact. This is the mission of the3087National Elder Fraud Coordination Center, to bring these3088efforts together, amplifying these investigations with cross-3089sector data to elevate the most impactful cases and speed up3090the process to allow for more of them. Our founding members,3091AARP, Amazon, Google, and Walmart, are dedicated to the idea of3092pooling their resources towards this worthy cause, and our3093partnership with the National Cyber-Forensics and Training3094Alliance offers the opportunity for hundreds of other companies3095to do the same.3096    Thank you for your time and attention to this important3097issue. I look forward to answering your questions.3098?30993100=======================================================================31013102                        Questions for the Record31033104=======================================================================31053106?31073108                 U.S. Senate Special Committee on Aging31093110    "Financial Aggression: How the Chinese Communist Party Exploits3111          American Retirees and Undermines National Security"31123113                             April 9, 202531143115                        Questions for the Record31163117                         Christopher Iacovella31183119                        Senator Raphael Warnock31203121    Question:31223123    In recent years, scammers and fraudsters have used more3124sophisticated techniques, such asartificial intelligence, to3125defraud seniors. What can Congress do to help the private3126sector combat the use of artificialintelligence in fraud? In3127addition to artificial intelligence, what other new3128technologies and techniques doyou see being used to target3129seniors?31303131    Response:31323133    We think Congress can play a role by clearly defining a3134single agency that the private sector can send information to3135about the latest scams and tactics being used to target3136American citizens. This agency would not take retaliatory3137action against private business, but act as a clearinghouse to3138filter information and summarize it for policymakers and the3139public so we can stay alert and be vigilant. This information3140flow could take the form of an anonymous submission. However,3141it would be best if the agency knew who sent the information so3142adequate follow-up could be conducted. Having a conversation to3143discuss the details of these issues is extremely important.3144This function could be run out of the FBI with close3145coordination from a dedicated group within the U.S. Securities3146Exchange Commission (SEC), each banking regulator, U.S.3147Treasury, the DNI, and a dedicated person from the Financial3148Stability Oversight Council (FSOC). These scams are not limited3149to bank and brokerage accounts, they also include the purchase3150of timeshares and other types of real estate deals in Mexico3151and other regions. I would also recommend an important3152presentation by Adam Anicich at the SEC, which describes some3153of the other types of scams that are being used beyond those3154related to Generative-AI. A link to his presentation is here3155https://www.sec.gov/files/20250306-isc-fraud-briefing-iac-3156meeting.pdf. Please feel free to reach out and use me and our3157organization as a resource as you think about ways to combat3158these scammers and protect American citizens and our seniors.31593160                 U.S. Senate Special Committee on Aging31613162    "Financial Aggression: How the Chinese Communist Party Exploits3163          American Retirees and Undermines National Security"31643165                             April 9, 202531663167                        Questions for the Record31683169                              Brady Finta31703171                        Senator Raphael Warnock31723173    As the Founder of the National Elder Fraud Coordination3174Center, you have witnessed firsthand how fraud against seniors3175remains a persistent and growing problem. In your written3176testimony, you cite only 10 to 15% of elder fraud victims3177report the crimes against them.\1\3178---------------------------------------------------------------------------3179    \1\ Financial Aggression: How the Chinese Communist Party Exploits3180American Retirees and Undermines National Security Before the Senate3181Special Committee on Aging and House Select Committee on the Chinese3182Communist Party, 119th Cong (April 9, 2025) (testimony from Brady3183Finta, Founder of the National Elder Fraud Justice Coordination3184Center), https://www.aging.senate.gov/imo/media/doc/713d6dee-b247-ab39-3185387e-35005767f950/Testimony--Finta%2004.09.25.pdf.31863187---------------------------------------------------------------------------3188    Question:31893190    Why are reporting rates so low?31913192    Response:31933194    In my experience, the lack of reporting is a combination of3195factors, the most prevalent being embarrassment and a feeling3196of hopelessness that "no one can do anything about it."31973198    Question:31993200    What are some consistent barriers seniors face when3201reporting these crimes?32023203    Response:32043205    Most consistently, the biggest barrier is the response3206given by the vast majority of law enforcement agencies: "Sorry,3207there's nothing we can do."3208    It has been my experience that victims are more likely to3209report to their financial institution or whatever company was3210used as a vehicle for the fraud. This is why partnering with3211these companies is a part of the solution.32123213    Question:32143215    How can Congress make sure that more of these crimes are3216reported?32173218    Response:32193220    Congress should fund and require the formation of Elder3221Justice Task Forces across the United States. When a city is3222equipped with an EJTF and personnel are permanently assigned to3223working those cases, word gets out that there is somewhere to3224go and there is a higher level of trust that something can and3225will be done. I've seen this happen in San Diego County.32263227                      Representative Haley Stevens32283229    Question:32303231    When fraudsters gain access to retirement accounts-often3232through various forms of scams-they sometimes withdraw funds3233directly by the fraudster or indirectly by the victim,3234triggering not only massive financial losses but also3235unintended tax consequences. For victims under 59+, these3236unauthorized withdrawals carry a 10% IRS early withdrawal3237penalty, and the IRS still treats the stolen amount as taxable3238income. This means victims may be penalized twice-first by the3239fraud and then by the tax code. I recently introduced the No3240Penalties for Victims of Fraud Act to waive the early3241withdrawal penalty and give victims a pathway to recover3242financially.3243    Based on your experience with financial fraud cases, how3244significant are tax penalties for victims of fraud trying to3245recover stolen funds, and what additional steps should Congress3246consider to ensure that retirement systems and financial3247institutions are not only responsive after fraud occurs, but3248proactive in preventing account compromise in the first place?32493250    Response:32513252    In my experience, taxing fraud losses is devastating to the3253victims. For many victims, it takes a very long time, if ever,3254for them to come to terms with the sometimes life-changing3255financial loss. This combined with the anger, shame and guilt3256often lead to health issues, isolation and mistrust. All of3257these residual effects of the crime are compounded when they3258later learn they must pay tax on money that was stolen from3259them. I'm sure to many this feels as though the US government3260is a part of the fraud.32613262    Question:32633264    We're seeing a disturbing rise in AI-generated fraud3265schemes-voice cloning, deepfakes, synthetic identities-that3266make it easier for criminals to impersonate family members,3267financial institutions, or even law enforcement. These tactics3268are being rapidly adopted by transnational crime groups,3269including those with ties to the PRC, to target vulnerable3270Americans, especially seniors.3271    From your perspective, how is artificial intelligence3272changing the way financial scams are conducted, and what types3273of safeguards or public-private collaboration should Congress3274be pursuing to stay ahead of these rapidly evolving threats?32753276    Response:32773278    Criminals will always use whatever technology and tactics3279are available to them to further their criminal schemes. I3280believe we must use the advantages cutting-edge technology3281offers to combat these frauds. Traditionally, the government3282has been too slow to employ new technologies in law3283enforcement. This is why a real-time and robust public/private3284partnership is key to allow industry to assist government in3285the responsible use of new fraud-fighting tools.32863287    Question:32883289    Law enforcement agencies across the country are3290increasingly overwhelmed by the scale and complexity of3291international scams involving digital currency, malware, and3292global money laundering networks. These schemes-many of which3293are linked to PRC-based criminal groups-are so widespread that3294even the Department of Justice's Elder Justice Task Forces,3295which are located in every U.S. Attorney's Office and3296coordinate federal, state, and local efforts to combat elder3297abuse, can only pursue a small fraction of reported cases.3298    What cybersecurity or investigative capabilities should3299Congress strengthen to ensure that law enforcement can3300meaningfully respond to PRC-linked financial crimes targeting3301U.S. seniors? Should Congress consider additional dedicated3302funding streams or task force expansion models?33033304    Response:33053306    Absolutely! While the DOJ has prosecutors assigned to the3307Elder Justice Task Forces, they do not have investigators.3308Without full-time investigators assigned to generate and work3309elder fraud investigations, the prosecution cart has no horses3310to pull it. Just as we as a country have done with Health Care3311Fraud Task Forces, Internet Crimes Against Children Task3312Forces, Safe Streets Task Forces, Organized Crime Drug3313Enforcement Task Forces, and Joint Terrorism Task Forces we3314must stand up Elder Justice Task Forces in every major city of3315the United States. We must then link these EJTFs in a3316meaningful way linking the biggest, most impactful cases and3317supporting them with the data of the private sector. The3318combined efforts of these EJTFs can play a huge role in bending3319the elder fraud curve.33203321    Question:33223323    According to recent reports, U.S. pension funds-including3324those for state teachers and public employees-have invested3325billions in PRC-based firms, including some tied to3326surveillance, defense, or forced labor. While many have since3327reduced exposure, concerns remain about ongoing fiduciary risks3328and national security implications.3329    From your perspective, what are the risks associated with3330continued public pension investments in PRC-linked entities,3331and how should Congress work with state and federal fiduciaries3332to better insulate retirement savings from exposure to3333adversarial economic systems?33343335    Response:33363337    This is clearly a risk. I believe regulation and education3338on this front is essential. However, there are hundreds of3339thousands of older Americans losing their life savings every3340year to pure fraud, aided often times from Chinese entities. In3341my opinion, pouring resources into stopping those who3342specifically target vulnerable Americans to steal from them to3343the tune of $61B a year should be of the highest priority.33443345    Question:33463347    Data shows that only 10 to 15 percent of elder fraud3348victims report the crime, and even fewer are able to recover3349their losses. The complexity, international scope, and3350emotional shame tied to these scams all contribute to3351underreporting, while the current support infrastructure-3352particularly for seniors-is limited in reach and scope.3353    What changes should Congress consider to improve the3354reporting process and ensure more comprehensive support for3355victims-particularly seniors-who fall prey to these often-3356sophisticated and internationally coordinated scams?33573358    Response:33593360    Under reporting is a huge problem. Not only do the victims3361feel hopeless, leading to a more difficult recovery process,3362law enforcement does not have all the pieces of the puzzle to3363put effective cases together. Unfortunately, this will likely3364not change until there are EJTFs in more jurisdictions. When a3365city is equipped with an EJTF and personnel are permanently3366assigned to working those cases, word gets out that there is3367somewhere to go and there is a higher level of trust that3368something can and will be done. I've seen this happen in San3369Diego County.33703371=======================================================================33723373                       Statements for the Record33743375=======================================================================33763377                 U.S. Senate Special Committee on Aging33783379    "Financial Aggression: How the Chinese Communist Party Exploits3380          American Retirees and Undermines National Security"33813382                             April 9, 202533833384                       Statements for the Record33853386                Senator Rick Scott Letter to SEC Nominee33873388    I would first like to congratulate you on your nomination3389to lead the Securities and Exchange Commission (SEC). The SEC3390plays an important role in protecting our markets, American3391investors and their livelihoods, and I look forward to working3392with you and President Trump's administration to ensure the3393integrity of our markets.3394    For years, I have been sounding the alarm to prior SEC3395Chair Gary Gensler regarding the ongoing issues with Chinese3396companies listed on U.S. Exchanges. These companies3397consistently fail to meet the requirements of our markets -3398misleading American investors and putting their investments and3399U.S. national security and economic security at risk - and the3400Biden administration and SEC Chair Gensler consistently failed3401to enforce the Security and Exchange Commission's (SEC)3402accounting standards and disclosure requirements that are3403required by law.3404    In 2020, the Holding Foreign Companies Accountable Act3405(HFCAA) was signed into law, requiring the SEC and Public3406Company Accounting Oversight Board (PCAOB) to identify publicly3407listed foreign companies that regulators have been unable to3408inspect or investigate. This law specifies that if a foreign3409company is not in compliance with reporting requirements for3410two consecutive years, the SEC must prohibit the securities of3411the issuer from being traded on any U.S. exchange.\1\3412---------------------------------------------------------------------------3413    \1\ In December 2022, Congress amended the act to reduce the three-3414year period to two years.3415---------------------------------------------------------------------------3416    According to recent reports\2\, Chinese companies listed on3417U.S. Exchanges continue to disregard SEC accounting standards3418and compliance deadlines required under the HFCAA. These3419standards are set to provide financial transparency and ensure3420every company listed on our exchanges is accurately disclosing3421the necessary business information needed to invest with3422prudence.3423---------------------------------------------------------------------------3424    \2\ https://www.wsj.com/opinion/sec-needs-to-hold-chinese-3425companies-accountable-investors-stock-exchanges-768157e03426---------------------------------------------------------------------------3427    The U.S.-China Economic and Security Review Commission3428(USCC) recently reported that there are currently 286 Chinese3429companies listed on U.S. Exchanges with a total market cap3430exceeding $1 trillion. Since January 2024, 48 of these Chinese3431companies were newly listed on three of our U.S. Exchanges.\3\3432With such a large amount of capital invested in those foreign-3433domiciled companies, failing to enforce the accounting and3434disclosure standards required by the HFCAA poses potentially3435dire risks to U.S. investors.3436---------------------------------------------------------------------------3437    \3\ https://www.uscc.gov/research/chinese-companies-listed-major-3438us-stock-exchanges3439---------------------------------------------------------------------------3440    The U.S. capital markets are the envy of the world,3441providing unparalleled access to funding for companies3442worldwide. However, this privilege comes with responsibilities,3443chief among them being transparency and adherence to our3444financial disclosure rules. It is alarming that Chinese3445companies continue to enjoy access to American capital while3446refusing to play by our rules.3447    The Biden-Harris administration's lack of enforcement of3448the HFCAA was deeply troubling and cannot continue. This3449inaction has effectively allowed Chinese companies to continue3450trading on U.S. Exchanges without making the necessary3451financial disclosures, potentially putting American investors3452at risk.3453    As you await Senate confirmation of your nomination to3454serve as the SEC Chairman, I seek your commitment to combat3455Chinese companies' defiance of these financial disclosure and3456reporting requirements, to fully enforce U.S. financial3457accounting standards for all companies listed on our exchanges,3458and to prioritize America's financial security.3459    Promoting the integrity of our financial markets must be3460one of your top priorities. American investors deserve3461protection, and all companies trading on our exchanges must be3462held to the same standards of transparency and accountability.3463    I appreciate your prompt attention to this issue. I welcome3464the opportunity to discuss your plans to fully enforce our laws3465to protect U.S. investors and our domestic financial markets3466following your confirmation.3467    Sincerely,3468    /s/3469    Rick Scott3470    United States Senator3471    cc: Acting U.S. Securities and Exchange Commission Chairman3472Mark Uyeda3473    Public Company Accounting Oversight Board Chair Erica3474Williams34753476                                     [all]