President Biden’s EO Directs CFIUS to Align with National Security Priorities

October 03, 2022

Michael Rosenberg

On September 15, an Executive Order on Ensuring Robust Consideration of Evolving National Security Risks by the Committee on Foreign Investment in the United States (“CFIUS”) was issued by the President of the United States.  This is the first EO issued since CFIUS was established in 1975 to provide formal presidential direction on risks the committee should consider.  The order’s purpose is to directly tie CFIUS’s actions with the administration’s national security priorities and it restated the U.S. commitment to open investment as part of economic policy.  It does not change the CFIUS process, legal jurisdiction or scope of reviewed transactions but rather builds upon existing practices. 

Potential Uptick in Voluntary Filings

One possible result of this EO is that it may lead to an increase in voluntary filings as companies not sure of whether to file may now acknowledge that a filing is needed. Furthermore, these organizations will once again need to consider the cost involved in filing if a national security agreement is required in order to complete the transaction.

The EO focuses on five items:

  • A transaction’s effect on the resilience of critical U.S. supply chains including those outside of the defense industrial base;
  • A transaction’s effect on the U.S. technological leadership in areas including microelectronics, artificial intelligence (AI), biotechnology, biomanufacturing, quantum computing, advanced clean energy and climate adaptation technologies;
  • Investment trends whereby an individual transaction is not significant; but when viewed with previous and/or pending transactions could pose a threat to national security;
  • Cybersecurity risks whereby an investment by a foreign person could provide them with the capability and possible intent to conduct cyber attacks; and
  • As personal data continues to be used as a tool, CFIUS should consider whether the transaction in question would allow the foreign investor to exploit such information.

In addition, the EO acknowledged the importance of continuous improvement to CFIUS’s review process and directed CFIUS to regularly review its processes and practices in order to remain responsive to evolving national security threats.

If you have any questions please consult the Fact Sheet provided by the White House or reach out to an advisor.

About Michael Rosenberg

Michael Rosenberg is a Director within EisnerAmper Digital, and co-leads the CFIUS Advisory Services.