In "CFIUS and the Cost of Risk Aversion," Wilson Sonsini partner Stephen Heifetz critiques the Committee on Foreign Investment in the United States (CFIUS) for its strict “no unresolved national security concerns” standard, likening it to a doctor who prescribes medicine only if there are no risks. Heifetz argues that this impractical standard can prevent beneficial foreign investments, using the example of a European investor’s potential stake in a U.S. AI start-up that could benefit U.S. military interests. He highlights that while the investor’s global connections might raise concerns, the investment could still be valuable. Heifetz suggests that CFIUS’s increased requirements since 2018 have led to higher costs and deterred investments without giving appropriate weight to the benefits of foreign investment. He advocates for revising the “no unresolved national security concerns” standard to allow for investments that are in the national security interest, even if they come with some risks, to better support U.S. magnetism and competitiveness.

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Stephen Heifetz, ‘CFIUS and the cost of risk aversion’ Columbia FDI Perspectives, No. 392, September 16, 2024. Reprinted with permission from the Columbia Center on Sustainable Investment (http://ccsi.columbia.edu.)