The Daily Signal - EXPOSED: How Wall Street Funnels US Money to CCP

Episode Date: May 11, 2025

In this eye-opening episode of The Daily Signal podcast, Rob Bluey interviews Chris Iacovella, CEO of the American Securities Association. Iacovella recently testified before Congress about a disturbing financial reality many Americans are unaware of. Iacovella explains how Wall Street exploits multiple loopholes that allow companies controlled by the Chinese Communist Party (CCP) to access American capital markets, despite laws prohibiting foreign ownership of Chinese companies. Key points discussed: How American investments are unknowingly funding CCP activities, including the internment of Uyghurs, PLA weapons systems, cyber attacks against the U.S., and what the State Department has classified as genocide The "Variable Interest Entity" loophole: Americans who think they're buying shares in Chinese companies like Alibaba are actually only purchasing rights to a contract with a Cayman Islands company that contracts with the mainland Chinese company The "Passive Index" loophole: Asset managers include mainland Chinese companies in index funds sold to U.S. investors, allowing these companies to access American capital without complying with U.S. laws and regulations Bipartisan legislation from Rep. Andy Barr and Sen. John Cornyn aimed at identifying Chinese companies with ties to the military or specific technology infrastructure Why China's economic competition is fundamentally unfair: "When you have slave labor, no environmental laws, no OSHA laws, and no labor laws, of course it's going to be cheaper" Iacovella also explains the mission of the American Securities Association as a non-Wall Street trade association representing approximately 100 member firms across the country. Its mission is to "promote investor trust and confidence and to facilitate the flow of capital to small businesses across America." Listen now to understand how your investments might be inadvertently supporting a foreign adversary and what you can do about it. Keep Up With The Daily Signal Sign up for our email newsletters: https://www.dailysignal.com/email⁠⁠⁠⁠⁠   Subscribe to our other shows:  Problematic Women: https://www.dailysignal.com/problematic-women⁠⁠⁠⁠⁠  The Signal Sitdown: https://www.dailysignal.com/the-signal-sitdown⁠⁠⁠⁠⁠  The Tony Kinnett Cast: https://www.dailysignal.com/the-tony-kinnett-cast Follow The Daily Signal:  X: ⁠⁠https://x.com/DailySignal⁠⁠⁠⁠⁠  Instagram: https://www.instagram.com/thedailysignal/⁠⁠⁠⁠⁠  Facebook: https://www.facebook.com/TheDailySignalNews/⁠⁠⁠⁠⁠  Truth Social: https://truthsocial.com/@DailySignal⁠⁠⁠⁠⁠  YouTube: https://www.youtube.com/user/DailySignal⁠⁠⁠⁠⁠  Rumble: ⁠⁠⁠⁠https://rumble.com/c/TheDailySignal⁠⁠⁠⁠⁠  Thanks for making The Daily Signal your trusted source for the day’s top news. Subscribe on your favorite podcast platform and never miss an episode. Learn more about your ad choices. Visit megaphone.fm/adchoices

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We'd love to talk. Business. Wall Street used multiple loopholes to get Chinese companies into our marketplace because they otherwise couldn't be here. Chinese law prohibits foreign ownership of their companies because the CCP owns those companies. Whether the CCP owns the companies through a 1% share that Xi ultimately has a say over, or they just don't want you to own any of it. They control everything. And they showed you that a few years ago when Jack Ma disappeared and the Alibabaa incident for, I think it was about.

eight months. He just disappeared. The prominent leader of a very large company in China, because he wasn't towing the party line. Chris Ikevella, CEO of the American Securities Association, welcome to The Daily Signal. Oh, thank you for having me. You just gave some tremendous testimony before Congress. And I want to begin there, because what you said in those remarks really opened my eyes to what's going on between China and Wall Street that I had no idea. So Chris, enlighten us about what your warning was to these senators. Well, yeah, I think what we tried to do was let the American people know that their money is going to fund Chinese Communist Party activities. And what that includes is the internment of Uyghurs, funding PLA weapons system, a cyber army

that relentlessly attacks this country, our businesses, and our people, as well as numerous other atrocities from a human rights perspective. including genocide, which the State Department has said that the CCP is engaged in. And that's just disgraceful. The fact that there is a loophole that allows our money to go over there and fund this, this is a foreign adversary. It's egregious and it needs to be closed. Now, can you explain what that loophole is?

I mean, I heard it in the testimony, but for our viewers here, explain to them how this works on Wall Street and with various index funds and how they get around what shouldn't be happening. So there's a couple of loopholes. There's, well, let's just start here. Wall Street used multiple loopholes to get Chinese companies into our marketplace because they otherwise couldn't be here. Chinese law prohibits foreign ownership of their companies because the CCP owns those companies. Whether the CCP owns the companies through a 1% share that Xi ultimately has a say over, or they just don't want you to own any of it.

They control everything. And they showed you that a few years ago when Jack Ma disappeared. and the Alibaba incident for, I think it was about eight months. He just disappeared, the prominent leader of a very large company in China because he wasn't towing the party line. But the loopholes are there's one called the Variable Interest Entity Company. This is a company that's listed on a U.S. stock exchange that U.S. people buy like Alibaba, but you don't actually own the company.

What you own is rights to a contract of a Cayman Islands company that contracts with the mainland Alibaba company or Chinese company. So if they steal from you, if they don't disclose things as a shareholder, your rights are limited and they stop in the Cayman Islands. That's one loophole. Then there's another one which I call the passive index loophole, which has been used by the asset managers. And what they do is they put these Chinese companies that are in mainland China,

not even on U.S. exchanges, into an index fund. and then they allow that fund to be sold to U.S. investors. The money goes into the fund. Those companies don't comply with any U.S. laws and regulations. Nothing. I mean, it basically is an anti-competitive to U.S. American small businesses because they have to pay compliance costs. They're subject to litigation, and they have to follow our rules.

These mainland Chinese companies don't, but they get access to our capital. And that's what we're trying to stop. What has been Wall Street's reaction to your comments before Congress? Wall Street will continually say, well, if it was made illegal, then we wouldn't do it. But yet, on the flip side of that coin, they're out there lobbying Congress every single day to try to poke loopholes into existing legislation or to try to stop it in its entirety. And that's the problem. Is there an appetite from Congress to do something about it in terms of closing loopholes or maybe passing legislation?

Yes. Congressman Barr and Senator Cornyn have a bill that looks very similar and what it's designed to do is identify these companies that are on in mainland China on mainland Chinese exchanges, but it's limited to those with ties to the Chinese military or to a specific technology infrastructure like quantum computing and laser technology and so forth that could make missiles or continually fund the surveillance state that they run over there in China. And so what it would do was allow any company that goes on the human rights list, the commerce list, the Department of Defense list to automatically then be triggered onto the OFAC sanctions list and the Treasury Secretary could decide how to ratchet up or down sanctions on those companies. Okay. And let's take a step back here. I don't want anyone to just assume that we know what China is doing that we should be concerned about. You mentioned a few of those things. But what is top of mind about why you're concerned about China in this day and age? Because there are a foreign adversary because they steal from us, intellectual property based. They're trying to compete with us on an unlevel playing field. I mean, if you look at the president's tariffs on China, they're justified because companies say, well, Oh, it's just cheaper to do business. We don't have that infrastructure here in the United States to do plastics, injection molding and things like that.

My response is when you have slave labor, no environmental laws, no OSHA laws, and no labor laws, of course it's going to be cheaper. So if they want to play by the rules of the game, our game, then they need to start doing that. And if they don't want to play by the rules, then they need to get thrown out of the game. Yeah. And part of it is the capital flow. It's a great point. And those are some of the economic concerns.

There's also the national security. concerns and what their ambitions are in Taiwan and other places. Chris, tell us what the American Securities Association is, what you do on a day-to-day basis. So we are a non-Wall Street Trade Association with some larger firms that are in regions across the country. And then we have a number of small groups. So we have about 100 members in total. And what we do is represent their interests against Wall Street mainly and try to help promote investor trust and confidence and to facilitate the flow of capital to small businesses across America. That's mainly our goal. And it's America is the key word there. That's excellent. Well, thank you for your leadership of the group. Thanks for

testifying and bringing this to our attention. We appreciate you spending time with the Daily Signal. Oh, thank you for the opportunity. Subscribe to get the news. The legacy media won't tell you and only the Daily Signal can bring to you.