Published on Jan 8th, 2021 |

The Division of Examinations (formerly known as OCIE) released a Risk Alert on Wednesday (1/6/21) notifying Investment Advisers, Broker-Dealers, and other market participants to investments in securities associated with Chinese Military Companies, as well as investors transacting in such securities.

On November 12, 2020 the Executive Order 13959 was signed addressing this threat from Securities Investments.

The EO provided an important statement regarding Transactions in certain securities and derivatives of Chinese Military Companies.

Below will be Important Takeaways from the EO Statement:

  • On January 11th, 2021 at 9:30 AM EST, U.S. persons (including both individuals and entities) will be prohibited from transacting in these certain securities and derivatives
  • There is an exception to being prohibited, if such transactions are for purposes of divestment and occur through November 11th, 2021
  • The OFAC published guidance on multiple occasions which can be found HERE

In addition, the SEC encourages firms to assess and review the impact of the EO.

Below are Key Reasons why firms should Review this Impact:

  • For their own investments
  • For the behalf of their investors and clients
  • To evaluate their related processes
  • SEC also recommends firms to review OFAC’s website for additional guidance

To learn more about this Risk Alert from the Division of Examinations click HERE.