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I recently provided insight for a Bloomberg Law article on the new interim rules implementing the Foreign Investment Risk Review Modernization Act (FIRRMA). The interim rules, which went into effect on November 10, broaden the authority of the Committee of Foreign Investment of the United States (CFIUS) – an interagency committee that reviews foreign investments in U.S. companies that could impact national security.

To implement the new interim rules, CFIUS is establishing a pilot program to carry out new requirements for foreign parties making investments, including non-controlling investments, in U.S. businesses involved in 27 explicitly designated industries that develop “critical technology.”

The Treasury Department imposed “pretty stringent, broad rules,” I explained. “The potential penalties are substantial, and the breadth of [covered] industries is pretty significant too. They could have limited it to a smaller subsection of industries.”

The full article, “CFIUS Review Law Sends ‘Critical’ Tech Companies Scrambling,” was published by Bloomberg Law on November 12, 2018, and is available online. Click here to read an earlier post on this blog further detailing the CFIUS pilot program.

In an article published in the November 2018 issue of the ACC Docket, I co-authored an article with Elliot Burger, senior legal counsel at Linamar Corporation in Ontario, Canada discuss the expanding role of the Committee on Foreign Investment in the United States (CFIUS).  CFIUS is the U.S. government committee that reviews transactions that could result in control of a U.S. business by a foreign person in order to determine whether the transaction could harm U.S. national security.

Continue Reading Foreign Acquisition of U.S. Assets: Aggressive Actions Likely to Continue

  • Mandatory declarations of certain transactions now required
  • Certain changes to pre-existing regulations also announced and effective immediately
  • Mandatory declaration requirement may not ease burden on parties filing with CFIUS

On October 11, the U.S. Treasury Department took the first steps to implement the significant changes introduced under the Foreign Industrial Review and Risk Modernization Act (FIRRMA). FIRRMA broadens the mandate of the Committee on Foreign Investment in the United States (CFIUS), which reviews foreign investments in the United States that could impact U.S. national security.

Most notably, the Treasury Department is establishing a pilot program that imposes new obligations on foreign parties making investments, even non-controlling investments, in U.S. businesses involved in 27 explicitly designated industries. The pilot program defines such investments as “pilot program investments.”

Continue Reading CFIUS Pilot Program Creates New Obligations and Challenges

I provided insight on Tesla Inc.’s recent announcement of potential Saudi Arabian funding to take the company private and how this move could draw scrutiny from the Committee on Foreign Investment in the United States (CFIUS).  “The big question is whether this technology is really sensitive enough and whether if acquired by a non-U.S. company it could have some kind of negative impact on U.S. national security,” I explained. I noted that this could be possible since the Trump administration has announced possible tariffs on auto imports for national security reasons.

Continue Reading Potential CFIUS Interest in Tesla Privatization

In a Law360 article published on August 7, Bass, Berry & Sims attorney Thad McBride provided insight on how the Foreign Risk Review Modernization Act (FIRRMA) legislation included in this year’s National Defense Authorization Act (NDAA) would alter the Committee on Foreign Investment in the United States (CFIUS) by broadening its authority when reviewing foreign investments in the U.S.

As part of FIRRMA’s effort to broaden CFIUS’s power, the interagency committee will officially have the ability to review foreign investments in U.S. companies that hold personal information of U.S. citizens. While this has been an issue for potential foreign investors in the past (i.e. MoneyGram International Inc.), its formal inclusion in the legislation text takes it to another level.

Continue Reading FIRRMA Legislation Will Broaden Authority for CFIUS Review of Foreign Investment in the U.S.

  • FIRRMA would significantly expand CFIUS jurisdiction.
  • Mandatory filing would be required in some cases.
  • Parties that protect and maintain personal information are likely to face more scrutiny.

As we have described in recent blog posts in March 2018, January 2018 and October 2017, a rash of proposed transactions have not survived the Committee on Foreign Investment in the United States (CFIUS) process.  Most notably, as we described here, in March 2018, President Trump announced that he would not allow Singapore-based Broadcom to acquire U.S.-based Qualcomm, a rival chipmaker.

The president made his decision based on the recommendation of CFIUS, the U.S. government’s inter-agency committee that reviews transactions that could result in control of a U.S. business by a foreign person in order to determine if the transaction would have an effect on the national security of the United States.

Continue Reading Proposed CFIUS Reform Moves Forward

On March 12, 2018, President Trump blocked Broadcom, a Singapore-based semiconductor manufacturer, from pursuing the purchase of U.S.-based Qualcomm, a rival chip maker.  Broadcom’s offer, reportedly for $117 billion or perhaps even more, would have been one of the largest technology deals in history.

The president’s decision followed a determination by the Committee on Foreign Investment in the United States (CFIUS) that the transaction was likely to pose unacceptable national security risks to the United States.  The president apparently made his decision shortly after Broadcom met with Pentagon officials in a final effort to salvage the deal.

Continue Reading CFIUS Continues Aggressive Intervention, Qualcomm Deal Blocked

  • MoneyGram and Ant Financial mutually terminate $1.2 billion proposed merger
  • CFIUS’s concerns focused on cyber and information security
  • Scrutiny of buyers’ information security processes is likely to increase

On January 2, 2018, U.S.-based MoneyGram International announced that its proposed acquisition by Ant Financial, a Chinese company owned by Alibaba, was being blocked by the U.S. Committee on Foreign Investment in the United States (CFIUS).  CFIUS is the U.S. government’s inter-agency committee tasked with reviewing foreign entities’ purchases of and investments in U.S. companies when the transaction could pose a threat to U.S. national security.

Continue Reading CFIUS Continues Focus on Information Security, Blocks Chinese Acquisition of MoneyGram

Thad McBride Provides Insight to The New York Times on CFIUS Raised Scrutiny of Foreign Investments in the U.S.In a November 8 article in the New York Times, I provided insight on increased scrutiny of foreign investments in the U.S by the Committee on Foreign Investment in the United States (CFIUS). Lawmakers recently introduced legislation that would expand CFIUS authority, at least in part due to lawmakers’ concerns about continuing Chinese investment activity in the U.S. This legislation follows a rare case in September where President Trump invoked CFIUS in blocking a $1 billion acquisition of a U.S. semiconductor manufacturer by a Chinese-backed private equity fund.

As I noted in the article, CFIUS is “looking at a lot more deals than they have traditionally, and a lot more politically sensitive deals.” Under the newly proposed legislation, stricter and further reaching reviews may become the norm.

The full article, Targeting China’s Purchases, Congress Proposes Tougher Reviews of Foreign Investments, was published on November 8, 2017, and is available online.