National Security

In the United States, CFIUS is authorized to review foreign investment in or acquisition of a U.S. business that may affect U.S. national security, and the current climate with respect to such reviews is rapidly evolving. It is essential to consider CFIUS implications of a transaction early to prevent transaction delays and other risks to deal certainty.

We advise foreign and domestic buyers including private equity firms and sovereign wealth funds as well as sellers, target companies, and third parties on the CFIUS review process and similar FDI national security review processes imposed by governments in Europe, Asia and around the world. We advise regarding deal structure and deal terms; we help determine whether to bring a transaction before regulatory authorities; we assemble the required information and materials for a filing; and, as appropriate and necessary, we negotiate mitigation terms and national security agreements and guide companies with respect to monitoring and enforcement of such agreements. Our attorneys also advise on strategies to address political and policy considerations.

Selected Experience:

• Represented GIC, a sovereign wealth fund for the Government of Singapore on a number of matters, including:
  • as part of an investor consortium led by Blackstone, Carlyle and H&F in the consortium's approx. US$34 billion acquisition of Medline Industries, a medical equipment manufacturer.
  • as part of an investor consortium led by Blackstone in the approx. US$20 billion acquisition of Refinitiv, a financial market data and infrastructure provider.
• Representing large investment groups respecting many CFIUS jurisdiction evaluations and transactions with CFIUS notification, some of which also required FOCI mitigation, spanning a wide variety of industries including oil and gas processing, mobile satellite services, telecom services, information technology, defense and homeland security, and cybersecurity, among others. The values of these deals range from the hundreds of millions into the billions.*
• Representing multiple non-U.S. investors with respect to negotiations of National Security Agreements to achieve CFIUS clearance.
• Represented an investment consortium in connection with its acquisition of a U.S. data business from a Chinese seller subject to a divestment order.
• Represented a South Korean acquiror of a U.S. semiconductor business.
• Advised a company with significant operations at U.S. airports regarding acquisition by a Middle Eastern company.
• Represented a multinational pharmaceutical company before CFIUS in connection with a US$62 billion acquisition.*
• Represented a global leader in engineering and manufacturing before CFIUS and the Directorate of Defense Trade Controls (DDTC) in its sale of a subsidiary to a Japanese manufacturer.*
• Represented a global defense, security and infrastructure technology company in its acquisition of a data analytics and cyber services provider to the U.S. intelligence community.*
• Represented some of the world’s largest aerospace and defense companies, as well as small and moderate-sized foreign manufacturers and services providers, making strategic investment transactions involving sensitive U.S. technologies and programs, navigating the CFIUS and other national security regulatory filing processes.*

*Includes experience of attorneys prior to joining the firm.

Companies that perform classified work for the U.S. government must comply with the National Industrial Security Program (NISP) and related requirements administered by several cognizant security agencies and offices, typically the U.S. Department of War (DoW)’s Defense Counterintelligence and Security Agency (DCSA). These rules govern whether and how a company may obtain or maintain a facility security clearance (FCL) for access to U.S. classified information and facilities. They also describe the types of mitigation and negation plans available to restrict foreign ownership, control, or influence (FOCI) over cleared contractors and the features of each option. In transactions involving government contractors, failure to address FOCI requirements can delay or jeopardize both deal execution and the continuity of performance on classified work. In the near future, the presence of, or requirement for, FOCI mitigation may even affect eligibility for certain covered DoD contracts even where no FCL is required.

The Dechert team possesses unmatched expertise negotiating FOCI mitigation agreements, with team members drawing from lengthy experience in private practice, inside the Federal Government at the Department of Defense and DCSA, and even prior services as a Facility Security Officer. Our team also has experience counseling clients whose security programs are subject to the oversight of the Department of Energy, the Nuclear Regulatory Commission, and the Intelligence Community. We advise investors, private equity sponsors, portfolio companies and government contractors on navigating FOCI and DCSA requirements across the full lifecycle of a transaction and beyond. Our attorneys assist clients in evaluating FOCI implications at the diligence stage, structuring investments and governance arrangements to preserve FCLs, and negotiating mitigation instruments with DCSA, including Proxy Agreements, Special Security Agreements, Security Control Agreements, Special Board Resolutions, FOCI Board Resolutions, and more. We also aid clients to draft, negotiate, and implement critical mitigation instrument supplemental plans, including Affiliated Operations Plans, Electronic Communications Plans, Technology Control Plans, Facility Location Plans, and Quality Management Plans.

Our team advises on implementation and ongoing compliance with all security obligations under 32 CFR Part 117 (the National Industrial Security Program Operating Manual (NISPOM)), including governance requirements, reporting obligations, and engagement with DCSA, for example respecting initial submissions of and material updates to the Standard Form 328 (SF-328), key management personnel (KMP) information and related personnel security clearance materials, and disclosures and assessments that may arise. We routinely support federal contractors at all stages of the FCL lifecycle, regardless of FOCI mitigation status, in order to promote robust yet resource-efficient security programs. We also advise on the evolving framework under Section 847 of the FY 2020 National Defense Authorization Act, which extends FOCI-related review and mitigation concepts beyond traditional cleared contractor contexts to certain covered unclassified DoD contracts. The Dechert team supports client preparedness for these expanded FOCI analyses and, potentially, FOCI mitigation in unclassified circumstances.

Drawing on our extensive experience with CFIUS reviews, export controls and national security compliance programs, we provide integrated advice to manage overlapping regulatory requirements and maintain uninterrupted access to classified contracts and other sensitive U.S. government work.

Selected Experience:

• Advising emerging technology industries, e.g., artificial intelligence, to identify and mitigate foreign beneficial ownership and control, including engaging with investors respecting highly sensitive ownership and control information, to complete SF 328 (Certificate Pertaining to Foreign Interests) and other disclosures.*
• Advised a multinational chemical company on Foreign Ownership, Control or Influence (FOCI) mitigation in connection with a US$75 billion business combination, including negotiation and implementation of mitigation arrangements.*
• Provided FOCI mitigation and National Industrial Security Program Operating Manual (NISPOM) compliance counsel to a foreign-owned U.S. electronics manufacturer following completion of the CFIUS approval process.*
• Established and negotiated numerous FOCI mitigation arrangements, including proxy structures and governance frameworks, to enable foreign investment in cleared U.S. government contractors.*
• Provided Defense Counterintelligence and Security Agency (DCSA) and FOCI guidance to an Irish engineering and design company and its telecommunications subsidiary supporting U.S. military operations.*
• Advised a major European defense contractor on U.S. national security, FOCI, export controls and government contracts issues in connection with its U.S. operations and investments.*
• Represented a large UK defense contractor in restructuring its U.S. business operations to streamline compliance requirements, consolidate FOCI mitigation measures and reduce duplicative costs.*
• Represented a UK-owned gaming software company to negotiate and implement FOCI mitigation enabling access to the U.S. defense market.*
• Provided FOCI mitigation counsel to satellite services companies receiving funding through private equity and venture capital sources across multiple rounds.*
• Advised private equity investors on structuring control and governance rights in portfolio companies to minimize FOCI constraints while preserving commercial flexibility.*
• Represented foreign creditors in U.S. defense contractor bankruptcies, including negotiation of national security risk mitigation measures and coordination with relevant U.S. government agencies.*

*Includes experience of attorneys prior to joining the firm..

The United States has established a new regulatory framework governing certain outbound investments by U.S. persons into companies associated with countries of concern in sensitive technology sectors, including semiconductors, artificial intelligence and quantum technologies. These rules, administered by the U.S. Department of the Treasury, prohibit certain transactions and require notification of others, and place increased emphasis on transaction-level diligence and investor accountability.

We advise private equity sponsors, asset managers, institutional investors and multinational companies on compliance with outbound investment restrictions across the investment lifecycle. Our attorneys assist clients in assessing whether proposed transactions are prohibited or notifiable, designing frameworks to support due diligence and preparing and submitting required notifications to the U.S. government. We also advise on structuring investments, governance rights and fund arrangements to manage regulatory risk while preserving commercial objectives.

Drawing on our broader national security practice, we provide integrated advice on the interaction between outbound investment controls, CFIUS, export controls and sanctions regimes, including contractual solutions and compliance program development tailored to investment platforms.

Selected Experience:

• Advised multiple asset managers on compliance with U.S. outbound investment regulations, including preparation and submission of notifications to the U.S. Department of the Treasury.
• Advised an asset management industry association in connection with comments on proposed outbound investment regulations and related rulemaking.
• Advised private equity sponsors and institutional investors on the application of outbound investment restrictions to potential investments, including diligence frameworks and risk assessments.
• Advised fund sponsors and investors on structuring side letters and other contractual arrangements to address outbound investment restrictions, including capital segregation and compliance representations.
• Advised lenders and investors on outbound investment-related representations, covenants and diligence considerations in financing and investment agreements.
• Assisted clients in developing internal compliance policies, procedures and training programs to address outbound investment requirements and related diligence obligations.

We know far more than the published regulations and guidance. Our attorneys advise on the practical scope, interpretation, application and jurisdictional nuances of the rules and the discretion exercised by sanctions enforcement authorities such as the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) and UK and EU regulatory agencies, including the UK Office of Financial Sanctions Implementation (OFSI). We have significant experience with sanctions applicable to Russia, Iran, Syria, Myanmar and Venezuela as well as the U.S. Global Magnitsky Sanctions and the UK Global Anti-Corruption Sanctions Regulations, among other programs.

Clients also benefit from our experience with transactions, investments and exports as well as relationships with subsidiaries, employees and third parties who may raise compliance concerns. We provide clear risk assessments of prohibited activities and commercially viable, legitimate business opportunities and help develop effective measures to mitigate potential risks.

We also advise on anti-money laundering enforcement matters and administrative proceedings brought by the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN), Financial Industry Regulatory Authority (FINRA) and U.S. federal financial regulators. Our team also represents clients before UK and European financial regulatory authorities and works with Dechert's cross-border investigations white collar defense group when clients face investigations and criminal prosecution.

We also perform internal compliance reviews and investigations, help draft voluntary disclosures and responses to government subpoenas and other inquiries, and represent clients before government enforcement proceedings related to economic sanctions and anti-money laundering laws and regulations.

Selected Experience:

• Advising multiple U.S. and European companies on divestiture of assets and wind-down of operations in compliance with recent U.S./UK/EU sanctions against Russia, including submission of license requests and requests for guidance to OFAC/OFSI.
• Representing multiple high net worth clients in the Middle East, Eastern Europe, Africa and Asia regarding OFAC's imposition of Global Magnitsky Sanctions on them and multiple companies under their ownership and/or control. Conducting internal investigations and engaging with OFAC and other U.S. government authorities regarding de-listing.
• Advised multiple financial institutions and financial services providers, including banks, asset managers, funds, cryptocurrency service providers, and insurance companies, regarding review of sanctions and AML systems and procedures.
• Assisted a publicly traded U.S. high-tech company with operations in more than 100 countries to audit its approach to compliance with international economic sanctions laws: identifying gaps, recommending corrective actions and establishing a tailored global compliance program.
• Represented a European travel company in connection with an internal investigation and disclosure to OFAC involving violations of the Cuba sanctions, leading negotiations with OFAC that resulted in significant reduction of the company's financial penalty.
• Represented the largest private airline in a Central Asian country and a UAE air freight company in connection with an internal investigation and disclosures to OFAC and BIS involving violations of the Iran sanctions and export controls, leading negotiations with both agencies that resulted in a settlement with no financial penalty.
• Defended an asset management firm in a complex multi-jurisdictional sanctions investigation and corresponding criminal investigation against a sensitive political backdrop.
• Worked with in-house counsel to conduct an internal investigation of a multinational company's Middle East operations in response to allegations of unauthorized distribution of goods to sanctioned countries, resulting in close-out letters with no further enforcement action from U.S. criminal and civil authorities.
• Represented a Latvian bank in connection with a FinCEN enforcement action. Conducted internal review and advised regarding reform of AML practices and internal controls to the satisfaction of FinCEN, such that proposed imposition of “special measures” under the USA PATRIOT Act was withdrawn.
• Representing a Middle Eastern financial institution designated under U.S. sanctions in connection with a de-listing petition before the U.S. Department of the Treasury, including engagement with OFAC.

We advise on U.S., UK and EU export and trade controls, including the Export Administration Regulations (EAR) administered by the U.S. Department of Commerce, the International Traffic in Arms Regulations (ITAR) administered by the U.S. Department of State, the EU Dual Use Regulation and EU Common Military List, covering “dual use” and military equipment respectively, and controls administered by the Export Control Joint Unit (ECJU) under the UK Department for Business and Trade (DBT) and other EU Member State authorities.

The U.S. government prohibits cooperation with foreign boycotts of countries friendly to the United States. The complex rules apply not only to U.S. companies and individuals but also to foreign affiliates doing business in the Middle East and elsewhere. The team advises clients on substantive prohibitions and exceptions and related reporting obligations.

We also perform internal compliance reviews and investigations, help draft voluntary disclosures and responses to government subpoenas and other inquiries, and represent clients before government enforcement proceedings related to export and trade controls laws.

Selected Experience:

• Represented a U.S. publicly traded company in an enforcement matter that resulted in a settlement between the company and DDTC.
  
• Represented U.S. and EU manufacturers of telecommunications equipment and related software in making and resolving voluntary disclosures to the Commerce and Treasury Departments in the U.S. and EU.
• Assisted a subsidiary of a major U.S. defense company with an export compliance audit.
• Advised one of the largest multinational chemical companies on compliance with global export controls.
• Helped a global provider of business and financial news services to carry out an internal investigation into unlicensed transfers of controlled products from its European distribution center.
• Advised a Japanese manufacturing company on EU and UK export control compliance.
• Assisted a leading testing and calibration company on EU export controls.
• Represented U.S. publicly traded companies in connection with multiple internal investigations pertaining to violations of export controls and economic sanctions laws.
• Helped a U.S. technology and manufacturing company develop an export controls and anti-corruption compliance program.
• Represented a multinational life sciences and technology company in an internal investigation into potential export controls and sanctions issues.

Working with companies across borders, Dechert's team creates and implements risk-based anti-corruption compliance programs that detect and prevent violations of the Foreign Corrupt Practices Act (FCPA), UK Bribery Act (UKBA) and similar laws elsewhere in the world. We counsel chief compliance officers, senior management, audit committees and boards of directors on sensitive matters including voluntary disclosure, discipline of employees and remediation.

Clients turn to Dechert for advice relating to internal and government investigations involving corruption, commercial bribery, bribery of foreign government officials and violations of local laws around the world. We also have experience with multilateral development bank anti-corruption investigations, audits and sanctions proceedings, including multi-jurisdictional and parallel investigations.

We also regularly advise clients with respect to suspension and debarment proceedings before U.S. government agencies and international financial institutions (IFIs). We assist clients in improving compliance policies, demonstrating present responsibility, and negotiating settlement agreements with government suspension and debarment officials.

We also perform internal compliance reviews and investigations, help draft voluntary disclosures and responses to government subpoenas and other inquiries, and represent clients before government enforcement proceedings related to anti-bribery laws.

Selected Experience:

• Represented a major manufacturing company in an FCPA investigation of alleged bribery of Middle Eastern officials.
• Assisted a leading European telecommunications company with anti-corruption due diligence regarding a multi-billion-dollar acquisition in sub-Saharan Africa.
• Represented a European pharmaceutical company in an FCPA internal investigation regarding alleged bribery of Russian government officials.
• Assisted a leading medical device manufacturer in an anti-corruption internal investigation in France.
• Represented the board of a global technology company regarding shareholder derivative claims related to FCPA violations.
• Represented a senior official of a major non-U.S. defense manufacturer in connection with proposed debarment by the U.S. Department of Defense, stemming from an FCPA investigation.
• Represented a South Korean construction company in connection with proposed debarment by the U.S. Department of Defense, stemming from an FCPA investigation.
• Defended a European provider of humanitarian aid products and services in connection with proposed debarment by USAID, stemming from an investigation into bid-rigging and fraud.
• Represented an Australian publicly traded, high-tech military communications company in connection with an internal investigation of FCPA/anti-bribery violations associated with sales to government customers in Southeast Asia, the Middle East and Africa. Conducted extensive data review and personnel interviews, provided final report of findings to the Board along with a comprehensive compliance remediation plan.
• Assisted a publicly traded life sciences company in an anti-corruption and anti-fraud internal investigation regarding alleged overcharging of government customers by third parties in Eastern Europe.

Dechert's global privacy & cybersecurity practice is second to none. It includes a deep, global bench with decades of experience, several of whom are pioneers in the space. Our team includes sought-after thought-leaders with unparalleled experience.

Our national security and privacy teams work together to provide solution-oriented, business-focused, forward-thinking advice and strategic counseling to the world's most sophisticated global companies – from Silicon Valley to the European Economic Area and beyond – on the most complex, cutting-edge privacy and cybersecurity matters that require an integrated approach to complying with global privacy, cybersecurity and national security laws.

Our national security and privacy teams collaborate to:

• Advise clients regarding restrictions on access to data by foreign investors imposed by CFIUS in the context of national security agreements.
• Assist clients with developing data security compliance programs to safeguard sensitive personal data.
• Advise regarding sanctions compliance issues that arise in the context of responding to data breaches, ransomware and national state espionage. 

For more information visit our Privacy & Cybersecurity page.

We advise clients on the delicate issues that arise when a company receives a Foreign Intelligence Surveillance Act (FISA) order or national security letter and negotiate the best options for response.

Our team members hold security clearances, and our experience includes high-level service in the U.S. Department of Justice, advising the president, U.S. Attorney General and senior intelligence community officials on the most sensitive national security legal matters, including FISA requirements and limitations. This government experience includes playing a central role in the executive branch's efforts to work with Congress to reform FISA, and in the public debates and hearings leading up to enactment of sweeping FISA amendments.