Sovereign Wealth Funds (SWFs) Investigation Defense
Our Lawyers Represent Sovereign Wealth Funds in the U.S. and Abroad During Governmental Investigations
Contact Nick directlySovereign wealth funds (SWFs) around the world are subject to extensive oversight with respect to their investments and financial transactions within the United States and with U.S. entities abroad. Similarly, SWFs in the U.S. must carefully address all aspects of domestic and international compliance to avoid unnecessary scrutiny from federal authorities. But, in some cases, scrutiny is simply unavoidable. Federal authorities will be determined to investigate, and they will bring their substantial resources to bear.
At Oberheiden P.C., we represent domestic and international sovereign wealth funds during governmental investigations. This includes investigations conducted by the U.S. Department of Justice, (DOJ), Federal Bureau of Investigation (FBI), Internal Revenue Service (IRS), Office of Foreign Assets Control (OFAC), Committee on Foreign Investment in the United States (CFIUS), and other authorities. Our lawyers have extensive experience on both sides of these investigations—as many worked at the DOJ before entering private practice.
We serve as defense counsel for domestic and foreign sovereign wealth funds facing investigations related to all financial and investment activities in the U.S. and abroad. Despite their sovereign status (which, in practice, is often limited), SWFs are subject to extensive oversight, and various financial and investment activities can trigger scrutiny from U.S. federal authorities. This includes activities such as:
- Investments in portfolio companies and divestitures of portfolio assets
- Investments in commodities and commodity export operations
- Interactions and financial relationships with central banks
- Debt transactions and financial restructurings
- Investments in infrastructure and energy projects (including federal, state, municipal, and private projects)
- Investments in public-private partnerships (PPPs)
- Privatizations and other acquisition transactions
- International trade activities
- Asset recovery efforts (including efforts to recover assets subject to OFAC seizures)
- Management (or alleged mismanagement) of state-owned or pension assets
We also represent sovereign wealth funds during investigations focused on examining their compliance efforts generally. This includes investigations targeting issues in the areas of tax law compliance, anti-money laundering (AML) compliance, and anti-corruption compliance—among others. With our firm’s broad-based federal defense practice and our lawyers’ combined experience on both sides of complex federal investigations, we are able to offer efficient, strategic, and custom-tailored legal representation for SWFs in virtually all investigation scenarios.
Regardless of the circumstances involved, federal investigations can present not only financial risks for sovereign wealth funds, but potentially financial and other legal risks for SWF managers and other individuals as well. We help our clients understand the scope of these risks, and then we develop and execute targeted defense strategies focused on protecting our clients as efficiently, comprehensively, and quietly as possible.
By their nature, sovereign wealth funds’ investment activities and financial transactions are often exceedingly complex. In many cases, this complexity alone can be enough to raise questions and lead to scrutiny—which ultimately proves to be unwarranted. When engaged as defense counsel for SWFs targeted in federal investigations, our lawyers work to quickly demonstrate our sovereign clients’ compliance, and to proactively answer federal authorities’ questions before they lead to intensive, time-consuming, and costly investigations whenever possible.
Put our highly experienced team on your side
Dr. Nick Oberheiden
Founder
Attorney-at-Law
Lynette S. Byrd
Former Department of Justice
Brian J. Kuester
Former U.S. Attorney
Former DA
John W. Sellers
Former Senior Trial Attorney
U.S. Department of Justice
Local Counsel
Joanne Fine DeLena
Former Assistant U.S. Attorney
Local Counsel
Joe Brown
Former U.S. Attorney & Former District Attorney
Local Trial & Defense Counsel
Amanda Marshall
Former U.S. Attorney
Local Counsel
Aaron L. Wiley
Former Federal Prosecutor
Local Counsel
Roger Bach
Former Special Agent (OIG)
Michael Koslow
Former Supervisory Special Agent (FBI)
Chris Quick
Former Special Agent (FBI & IRS-CI)
Ray Yuen
Former Supervisory Special Agent (FBI)
How We Represent Sovereign Wealth Funds During Governmental Investigations
For sovereign wealth funds that are under investigation, how they approach the government’s investigation is key. In many cases, the right approach can be the difference between a relatively efficient and amicable resolution and a contentious, protracted investigation that ultimately leads to litigation. With this in mind, our approach to representing domestic and international SWFs that are facing scrutiny from federal authorities involves:
1. Opening Effective Lines of Communication
When dealing with federal authorities, opening effective lines of communication is key. Doing this as early as possible can help set the stage for a collaborative—rather than confrontational—process. When our firm is engaged to represent a sovereign wealth fund in a federal investigation, we quickly make contact with the investigating agency and begin gathering the insights and intelligence we need to formulate our client’s next steps.
2. Identifying the Purpose of the Government’s Investigation
One of the primary purposes of quickly engaging with the investigating agency in a collaborative way is to identify the purpose of the government’s investigation. As discussed above, investigations into sovereign wealth funds can target an extremely broad range of allegations. Once we determine why the government is investigating, then we can tailor our legal representation accordingly.
3. Demonstrating Our Client’s Commitment to Its Core Objectives
In many cases, federal investigations targeting sovereign wealth funds will arise out of a perception that the fund has deviated from its foundational purpose of protecting state-owned funds and maximizing its return on investment. Demonstrating that this is not the case—that the investments or transactions in question in fact serve the SWF’s overarching goal—can go a long way toward resolving an investigation without triggering enforcement litigation. When warranted, we help our SWF clients exhibit their continued commitments to their core objectives, including:
- Taking a long-term approach to balancing the budget and stabilizing the economy
- Reducing the state’s investment risk to preserve assets for future generations in volatile economic circumstances
- Revising prior investment strategies to generate sustainable long-term capital growth
- Diversifying investments to minimize risk, particularly when SWFs are highly leveraged in non-renewable commodities
- Assisting with the dissipation of unwanted or unnecessary liquidity
- Funding social and economic development projects and initiatives
- Funding state-level policy strategies without depleting state reserves
- Avoiding (or exiting) investments in companies and nations with politically-sensitive implications
4. Demonstrating Our Client’s Sincere and Good-Faith Compliance Efforts
Favorably resolving federal investigations in the U.S. frequently involves demonstrating the targeted sovereign wealth fund’s sincere and good-faith compliance efforts. SWFs’ compliance obligations are extraordinarily complex, and even the government’s attorneys often don’t have a clear understanding of what is permitted, what is prohibited, and what is required. Conflicting interpretations in the judiciary can create challenging questions as well, and showing that an SWF’s investment decisions are well-intentioned can help prevent a government investigation from turning toward more serious—and potentially criminal—allegations.
5. Steering the Investigation Toward a Positive Outcome
Regardless of the facts at hand, from the outset of our engagement we work to steer our client’s investigation toward a positive outcome. We leverage the available evidence (or the lack thereof), and we seek to take control of the investigative process. While securing a positive outcome may mean negotiating a settlement with the investigating agency in some cases, we have had significant success protecting our clients against legal and financial ramifications entirely.
FAQs: What SWF Managers Need to Know When Facing Federal Investigations in the United States
What triggers a federal investigation into a sovereign wealth fund in the United States?
Various factors can trigger a federal investigation into a sovereign wealth fund in the United States. This includes everything from media coverage to whistleblower complaints. Federal authorities scrutinize foreign SWFs’ investments in the United States and relationships with U.S. entities abroad, and they scrutinize all aspects of domestic SWFs’ operations.
What are the potential outcomes of a U.S. federal agency investigation into a domestic or foreign sovereign wealth fund?
For sovereign wealth funds, the potential outcomes of a U.S. federal agency investigation range from no action to enforcement litigation. Funds and their managers can even face criminal enforcement litigation in some cases. At Oberheiden P.C., we focus on favorably resolving our clients’ investigation before the litigation stage—helping our clients avoid penalties entirely whenever possible.
The penalties that U.S. federal authorities can impose against sovereign wealth funds are primarily financial in nature. However, enforcement actions can also lead to injunctions, sanctions, and other types of penalties in some cases. For SWF managers accused of fraud, money laundering, and other federal crimes, prison time can also be on the table.
When should a sovereign wealth fund engage defense counsel for a U.S. federal investigation?
We recommend that SWF managers engage outside defense counsel immediately upon learning of a federal investigation. Prompt intervention can be crucial; and, at Oberheiden P.C., our lawyers can get to work immediately determining the focus of the investigation and building a strategic defense.
Why do sovereign wealth funds choose Oberheiden P.C. for investigation defense?
Oberheiden P.C. is a federal compliance and defense law firm that represents clients across the United States and around the world. Many of our lawyers used to oversee federal investigations at the DOJ, and all of our senior lawyers have extensive experience—and a proven record of success—representing clients in high-stakes U.S. federal matters.
Contact the Sovereign Wealth Fund Investigation Lawyers at Oberheiden P.C.
If you would like to speak with a lawyer about our firm’s sovereign wealth fund investigation defense practice, we invite you to contact us today. We represent sovereign wealth funds in the United States and abroad. Call 888-680-1745 or send us your contact information online to arrange a complimentary initial consultation.