Rubio Urges More Disclosure on Investors in National Security Firms

GOP Senator Marco Rubio is proposing greater scrutiny of activist investors in companies involved in national security work or supply chains as part of broader legislation aimed at bolstering U.S. competitiveness with China.

Rubio, the top Republican on the Senate Intelligence Committee, has introduced a proposal that would lower the threshold for disclosure -- to 2.5% of shares outstanding from 5% -- from investors who want to influence company management in any way that might affect national security or supply chain assets.

At issue are forms that must be filed with the SEC by certain investors whenever their stakes in the company reach or exceed 5%. The forms, known as Schedule 13Ds, are meant to identify large investors who plan to be actively engaged at the firms and require them to generally disclose their plans for the company.

“Shareholders have a right to know when a transaction or election they are voting on could undermine America’s national security or our critical supply chains, and expose the company to material risks associated with the U.S.-China conflict,” the Florida Republican said in a statement.

The proposal would also establish a committee of top national security officials including the secretaries of State and Defense to advise the Securities and Exchange Commission on regulations involving national security concerns, including defining national security or supply chain assets. The committee would also include the attorney general, the secretary of Homeland Security, the secretary of Commerce and the U.S. trade representative.

Rubio is seeking to add the provision to a bill moving through the Senate Foreign Relations Committee, on which he also sits. The Strategic Competition Act, which will be taken up by the committee on Wednesday, is expected to be added to a broad bipartisan package of legislation being assembled by Senate Majority Leader Chuck Schumer.

The proposal comes on the heels of a bill passed last year and signed into law by former President Donald Trump that kicks Chinese companies off U.S. exchanges if they fail to comply with U.S. accounting oversight and is part of a sea change in congressional treatment of Chinese investment in the U.S. market.

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.