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Global FS firm: Threat of outbound regime already impacting managers
While law firms have been informing their clients that an outbound foreign-investment review regime is imminent, financial services firms have been relatively silent. Until now. At least one firm expects to see increased due diligence costs, and admits that portfolio managers have already been impacted.
SVB and CFIUS: Is the Committee already on top of the bank failures?
Experts say the collapse of Silicon Valley Bank and Signature Bank has raised important questions regarding foreign investment and national security. Among them: Might SVB assets, or even FDIC rescue capital, end up in the hands of entities controlled by the People’s Republic of China? Insights inside.
Judicial deference, contracting costs, and national security creep
We’re not ones for academic research papers, but a recent 66-page essay by two professors actually got our attention. The professors argue that the expansion of CFIUS’s jurisdiction and national security “creep” may have broader implications on dealmaking and the economy. Details inside.
Could the RESTRICT ACT create jurisdictional overlap with CFIUS?
Last week, a bipartisan group of U.S. Senators introduced legislation that would address the “ongoing threat” posed by technology from foreign adversaries. The legislation would impact how the U.S. addresses technology risks, but experts warn it could yield jurisdictional conflict with CFIUS.
Why the DoJ wants $3.4M more for its foreign investment review work
The Department of Justice’s fiscal year 2024 budget request seeks $32.7 million in total program increases. About 10 percent of that is requested for the National Security Division “for reviewing foreign investments in U.S. industries that may impact national security.” Details, budget inside.
A look at the national security laws in China facilitating tech transfer
China has several national security laws that require citizens and businesses to cooperate with law enforcement and intelligence agencies. These regulations also present an opportunity to facilitate technology transfer and conduct espionage. Details and a downloadable cheat sheet inside.
Ex-CFIUS head says TikTok risks remain “unacceptably unresolved”
The drumbeat regarding national security risks posed by TikTok has reached a fever pitch. But according to Thomas Feddo, who served as the first-ever Assistant Secretary for Investment Security at the Treasury Department, the risks remain “unacceptably unresolved.” His insights are inside.
Will Disruptive Tech Strike Force play a role in outbound screening?
The Departments of Commerce and Justice are creating a Disruptive Technology Strike Force to “strike back against adversaries trying to siphon our best technology.” According to experts, the Strike Force may play an important role in any outbound investment screening regime. Details inside.
U.S. Senator and China both want to review Ford-CATL battery deal
This might be the first time that Sen. Marco Rubio and the Chinese government are in agreement. Last week, Sen. Rubio asked the Biden administration to review Ford’s plan to build a battery factory using technology from China’s CATL. The Chinese are also reviewing the deal. Details and implications inside.
We provide a summary from House Committee hearing on China threat
In case you missed it, the House Financial Services Committee recently held a five-hour hearing (yes, you read that right) on the economic threat from China. The hearing explored a wide array of issues, including outbound investment. Details, summary, testimony, and additional resources are inside.
The UK and New Zealand to remain excepted foreign states. Big whoop?
CFIUS has determined that the UK and New Zealand will remain “excepted foreign states.” That means that qualifying investors from all “Five Eyes” countries will continue to be excepted from CFIUS review of certain types of transactions. Details, and the answer to the question “so what?” are inside.
Additional foreign ownership bills proposed in U.S. states last week
North Dakota is the latest state to propose a bill that would limit foreign investment in the state. The move comes as Wyoming and other states have seen similar legislation. Critics say a patchwork of state laws will ultimately undermine CFIUS. Details and a list of state-by-state initiatives are inside.
CFIUS signals heightened attention on bankruptcy-related transactions
In a provocative demonstration that it scrutinizes all types of transactions, no matter their origin, CFIUS has reportedly been vetting the proposed $1 billion sale of bankrupt crypto lender Voyager Digital’s assets to Binance. Details, context, and why the development matters, are inside.
U.S. Air Force pushes back on the CFIUS decision regarding Fufeng
As we reported last year, CFIUS concluded that the acquisition of land in Grand Forks, ND, by Fufeng USA was outside the Committee’s jurisdiction. But a letter from a U.S. Air Force Assistant Secretary now says the project could have “significant impact” on operations. Details and the letter are inside.
Yet another bill (tenth?) targets agriculture and national security
Five members of Congress have floated a bipartisan bill to protect national security by preventing foreign adversaries from taking control of U.S. agricultural land and businesses. We provide a wrap-up of the effort to date, and how the latest legislative proposal differs from other efforts.
More frequent foreign ownership “re-reviews” by FCC are coming
According to a speech delivered last week by FCC chair Jessica Rosenworcel, the Commission will likely propose a rule to regularly re-assess a foreign carrier’s authorization to provide service. The re-reviews would account for evolving national security risks. “Stay tuned,” she said.
U.S. government kicks off latest survey of foreign direct investment
Every five years, the Bureau of Economic Analysis conducts a comprehensive survey regarding foreign direct investment in the U.S. And guess what? 2023 is it. But unlike the efforts of CFIUS, the BEA’s survey is focused on financial and operating data, not national security. Details inside.
Canada to increase penalties for non-compliance with FDI reviews
The Canadian government, which recently issued new guidelines on the country’s national security review process, is poised to set even tougher review provisions. Among the proposed changes: More than doubling the penalties for non-compliance with the Investment Canada Act. Details inside.
States trying to override executive branch in area of national security?
A member of the Wyoming state legislature has proposed a bill that would ban foreign citizens and companies from owning agricultural land in the state. The move is the latest in a series of state actions that may run counter to the judgment of Congress. Details, and why it matters, are inside.
Exclusive: DoJ’s FIRS chief clarifies how transactions get scrutinized
This week, we sit down with Devin DeBacker, who is Chief of the Foreign Investment Review Section in the National Security Division of the Department of Justice. DeBacker explains four important factors that the DoJ considers when scrutinizing transactions for sensitive data. That and more inside.