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Heather Finstuen

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Heather Finstuen represents and counsels government contractors in connection with internal investigations, national security law, mandatory disclosures, federal inquiries and investigations, and compliance policies and procedures. Ms. Finstuen’s experience includes conducting internal fraud and ethics investigations in various industries (defense, manufacturing, software, banking and finance, healthcare, food) into a range of issues including labor charging, cyber security, billing and claims, sourcing requirements, manufacturing and quality control processes, accounting, compensation structures, and mortgage foreclosure practices. In the national security area, Ms. Finstuen frequently advises companies and individuals on national security regulations relating to security clearances, safeguarding classified information, and the determination and mitigation of foreign ownership, control, or influence (FOCI) by the Defense Security Service (DSS) of the Department of Defense. She has represented companies in connection with investigations and consent orders of the Department of Justice, the Department of Defense, the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Securities and Exchange Commission. Ms. Finstuen also has represented Fortune 500 companies in complex commercial litigation in federal and state courts.

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On the heels of Russia’s invasion of Ukraine, pandemic-induced supply chain disruptions, and U.S.-China tensions over Taiwan, 2022 accelerated a sweeping effort within the U.S. government to make national security considerations—especially with respect to China—a key feature of new and existing regulatory processes. This trend toward broader national security regulation, designed to help maintain U.S. strategic advantage, has support from both Republicans and Democrats, including from the Biden Administration. National Security Advisor Jake Sullivan’s remarks in September 2022 capture the tone shift in Washington: “…[W]e have to revisit the longstanding premise of maintaining ‘relative’ advantages over competitors in certain key technologies…That is not the strategic environment we are in today…[w]e must maintain as large of a lead as possible.”

This environment produced important legislative and regulatory developments in 2022, including the CHIPS and Science Act (Covington alert), first-ever Enforcement and Penalty Guidelines promulgated by the Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”) (Covington alert), President Biden’s Executive Order on CFIUS (Covington alert), new restrictions under U.S. export control authorities targeting China (Covington alert), and proposals for a new regime to review outbound investments by U.S. businesses (Covington alert). The common thread among these developments is the U.S. government’s continuing appetite to use both existing and new regulatory authorities to address identified national security risks, especially where perceived risks relate to China.

With a Republican majority in the U.S. House of Representatives riding the tailwinds of this bipartisan consensus, 2023 is looking like a pivotal moment for national security regulation—expanding beyond the use of traditional authorities such as trade controls and CFIUS, into additional regulatory domains touching upon data, communications, antitrust, and possibly more. In parallel, the U.S. focus on national security continues to gain purchase abroad, with foreign direct investment (“FDI”) regimes maturing in tandem with CFIUS, and outbound investment screening gaining traction, for example, in the European Union (“EU”). It is crucial for businesses to be aware of these developments and to approach U.S. regulatory processes with a sensitivity towards the shifting national security undercurrents described in greater detail below.…

Continue Reading Will 2023 Be an Inflection Point in National Security Regulation?