Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, May 20, 2009

GAO Report on Sovereign Wealth Funds

The GAO released a report on SOVEREIGN WEALTH FUNDS: Laws Limiting Foreign Investment Affect Certain U.S. Assets and Agencies Have Various Enforcement Processes.  Here is the summary:

Foreign investors in U.S. companies or assets include individuals, companies, and government entities. One type of foreign investor that has been increasingly active in world markets is sovereign wealth funds (SWF), government-controlled funds that seek to invest in other countries. As the activities of these funds have grown they have been praised as providing valuable capital to world markets, but questions have been raised about their lack of transparency and the potential impact of their investments on recipient countries. GAO’s second report on SWFs reviews (1) U.S. laws that specifically affect foreign investment, including that by SWFs, in the United States and (2) processes agencies use to enforce them. GAO reviewed policy statements, treaties, and U.S. laws, and interviewed and obtained information from agencies responsible for enforcing these laws. GAO also interviewed legal experts and organizations that track state foreign investment issues.

What GAO Recommends
To enhance oversight of foreign investments, GAO recommends that FCC, Agriculture, and DOT review the information they currently monitor to detect changes in ownership of U.S. assets subject to restriction or disclosure and assess the value of supplementing it with information from other government and private data sources on investment transactions.

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