House Financial Services Committee calls on Treasury to address sovereign wealth funds in FINSA regulations
The US House Financial Services Committee has urged the Department of Treasury to heighten its scrutiny of foreign government investment vehicles—such as a sovereign wealth funds.
Representative Barney Frank, who is chairman of the House Financial Services Committee, along with other members, sent a letter to the Department of Treasury Secretary Henry Paulson, regarding the development of regulations for the implementation of the Foreign Investment and National Security Act (FINSA) when they are reviewed by CFIUS.
In the letter the Committee said: ‘We do not believe the current regulations are sufficiently clear in describing the role that the 10 % threshold plays as a test for control for CFIUS’s purposes.’
‘The regulations should not give the false impression that investments below this threshold are also below the radar in terms of the CFIUS’s ability to do its work,’ warned the letter.
The Committee members also said that FINSA regulations should provide guidance on factors that CFIUS should consider in determining whether or not to waive a full investigation of a proposed investment vehicle.
‘[Policies and procedures] would serve to clarify how CFIUS will treat sovereign wealth funds and would also, in our view, provide some constructive pressure on many funds that do not currently follow best practices,’ said the letter.
