DealLawyers.com Blog

Last week, the Treasury Department announced that it has finalized rule changes proposed back in April that expand CFIUS’s penalty and enforcement authority. This Gibson Dunn memo notes that the changes were largely adopted as proposed, with the exception of modifying the time frame within which parties are required to respond to mitigation agreement proposals.

The final rule reflects the following key changes highlighted in the announcement:

– Expanding the types of information CFIUS can require transaction parties and other persons to submit when engaging with them on transactions that were not filed with CFIUS;

– Allowing the CFIUS Staff Chairperson to set, as appropriate, a timeline for transaction parties to respond to risk mitigation proposals for matters under active review to assist CFIUS in concluding its reviews and investigations within the time frame required by statute;

– Expanding the circumstances in which a civil monetary penalty may be imposed due to a party’s material misstatement and omission, including when the material misstatement or omission occurs outside a review or investigation of a transaction and when it occurs in the context of CFIUS’s monitoring and compliance functions;

– Substantially increasing the maximum civil monetary penalty available for violations of obligations under the CFIUS statute and regulations, as well as agreements, orders, and conditions authorized by the statute and regulations, and introducing a new method for determining the maximum possible penalty for a breach of a mitigation agreement, condition, or order imposed;

– Expanding the instances in which CFIUS may use its subpoena authority, including in connection with assessing national security risk associated with non-notified transactions; and

– Extending the time frame for submission of a petition for reconsideration of a penalty to CFIUS and the number of days for CFIUS to respond to such a petition.

The changes will be effective 30 days after publication in the Federal Register. We’re posting memos in our “National Security Considerations” Practice Area.

– Meredith Ervine