February 2024 - cypherpunks - lists.cpunks.org

Worldwide: DoD Updates Section 1260H List Of Chinese Military Companies Operating Directly Or Indirectly In The United States
by Gunnar Larson 15 Feb '24

15 Feb '24

Oh no! I think STX may fall under: Entities affiliated with the Chinese Ministry of Industry and Information Technology, including research partnerships and projects. - Stacks’ strong third-party presence in Hong Kong extends to China. > One of Stacks’ board members has served as a leader of a Shanghai based > incubator. ---- https://www.mondaq.com/unitedstates/export-controls--trade--investment-sanc… Worldwide: DoD Updates Section 1260H List Of Chinese Military Companies Operating Directly Or Indirectly In The United States 13 February 2024 On January 31, 2024, the Department of Defense (DoD) released an update to its list of "Chinese military companies" that are "operating directly or indirectly in the United States" in accordance with the statutory requirement of Section 1260H of the National Defense Authorization Act for Fiscal Year 2021, P.L. 116-283. The revised Section 1260H List is available here. While designation on the Section 1260H List alone has no current legal consequences (unlike, e.g., sanctions and export controls restricted party lists), Section 805 of the FY 2024 NDAA, passed in December 2023, imposes new contracting restrictions on DoD with respect to entities on the Section 1260H List or any entity subject to the control of such an entity, which will become effective on June 30, 2026. Implementing regulations for this law are forthcoming by DoD. As many restricted party screening platforms include entities listed on the Section 1260H List, we expect companies to undertake closer scrutiny of entities on the Section 1260H List given the reputational considerations associated with such a listing. Background Section 1260H of the Fiscal Year (FY) 2021 National Defense Authorization Act (NDAA) (Section 1260H List) states that the Secretary of Defense shall annually (until the end of 2030) "identify each entity Secretary determines, based on the most recent information available, is operating directly or indirectly in the United States or any of its territories and possessions, that is a Chinese military company" (emphases added). See our prior client alert for additional background on this topic. For purposes of Section 1260H, "Chinese military company" means an entity that is "engaged in providing commercial services, manufacturing, producing, or exporting" and is either: (1) "directly or indirectly owned, controlled, or beneficially owned by, or in an official or unofficial capacity acting as an agent of or on behalf of, the People's Liberation Army or any other organization subordinate to the Central Military Commission of the Chinese Communist Party"; OR (2) "identified as a military-civil fusion contributor to the Chinese defense industrial base." 1 The term "military-civil fusion contributor" includes any of the following: (A) Entities knowingly receiving assistance from the Government of China or the Chinese Communist Party through science and technology efforts initiated under the Chinese military industrial planning apparatus. (B) Entities affiliated with the Chinese Ministry of Industry and Information Technology, including research partnerships and projects. (C) Entities receiving assistance, operational direction or policy guidance from the State Administration for Science, Technology and Industry for National Defense. (D) Any entities or subsidiaries defined as a "defense enterprise" by the State Council of the People's Republic of China. (E) Entities residing in or affiliated with a military-civil fusion enterprise zone or receiving assistance from the Government of China through such enterprise zone. (F) Entities awarded with receipt of military production licenses by the Government of China, such as a Weapons and Equipment Research and Production Unit Classified Qualification Permit, Weapons and Equipment Research and Production Certificate, Weapons and Equipment Quality Management System Certificate or Equipment Manufacturing Unit Qualification. (G) Entities that advertise on national, provincial and non-governmental military equipment procurement platforms in the People's Republic of China. (H) Any other entities the Secretary determines is appropriate. 2 (emphasis added) Department of Defense (DoD) published the initial Section 1260H List in June 2021 and last updated it in October 2022. New Additions to the Section 1260H List In announcing the updated Section 1260H List, DoD highlighted, as it has before, how this list is part of "an important continuing effort in highlighting and countering the [People's Republic of China's (PRC)] Military-Civil Fusion Strategy," which, according to DoD, "supports the modernization goals of the People's Liberation Army (PLA) by ensuring its access to advanced technologies and expertise are acquired and developed by PRC companies, universities, and research programs that appear to be civilian entities." The updated Section 1260H List includes 17 new entities, as noted in the appendix, and also removed three entities from the prior version. Several of these newly-listed entities (like some of those previously listed on the Section 1260H List) are also designated on other U.S. restricted party lists, such as the U.S. Department of Commerce, Bureau of Industry and Security's (BIS) Entity List and Military End User List (MEU List) and the U.S. Department of Treasury, Office of Foreign Assets Control's (OFAC) Non-Specially Designated Nationals (SDN) Chinese Military-Industrial Complex Companies List (NS-CMIC List). However, some of the newly listed entities are not listed on any other restricted party list at this time. Other than the new government contracts prohibitions described in more detail below that will take effect after June 2026, and unless the Section 1260H List entity appears on another restricted party list, mere designation on the Section 1260H List does not currently carry any independent legal effect. However, as described in more detail below, Congress is considering several legislative proposals to enhance the legal consequences of a Section 1260H List listing. New Government Contracts Prohibitions Associated with Section 1260H List Section 805 of the FY 2024 NDAA, which President Biden signed into law on December 22, 2023, (see here) imposes prohibitions on purchases by DoD of goods or services produced or developed by Chinese military companies identified on the Section 1260H List and entities that they control. Effective June 30, 2026, DoD will be prohibited from executing new contracts with entities on the Section 1260H List and entities under their control, as well as renewing or extending current contracts with such entities. And, effective June 30, 2027, DoD will be prohibited from purchasing end products or services produced or developed by affected entities indirectly through third parties. Notably, the contemplated prohibitions are not identical to prior contracting prohibitions, such as Section 889 of the FY 2019 NDAA. Unlike Section 889, for example, this new statute does not prohibit DoD from purchasing end products that contain components from affected entities as long as the purchase is not directly from one of these entities. Specifically, for indirect purchases, Section 805 has an exception excluding the purchase of components generally and as part of an end product. Additionally, the prohibition only applies to DoD, not the federal government writ large. DoD has one year to issue rules implementing the June 2026 restriction and 545 days for the June 2027 restriction. The specifics of the Section 805 implementing regulations will likely require prime contractors to DoD to conduct expanded diligence to determine whether there are goods or services produced or developed by the identified Chinese military companies (and entities under their control) in their supply chain in order to maintain its compliance with the outlined restrictions. Impact The updated Section 1260H List is consistent with the Biden administration's broader coordinated "strategic competition" strategy and approach to China, including under export controls administered by BIS, import laws administered by U.S. Customs and Border Protection (CBP), sanctions administered by OFAC and by other means, including other trade controls addressing U.S. foreign policy concerns associated with human rights, forced labor and other issues. While the legal impact of a Section 1260H List designation standing alone is limited, such a designation could nevertheless carry reputational risks as many reputable restricted party screening providers will screen against the Section 1260H List, requiring companies reviewing those screening results to consider their risk profile. In addition, companies should be mindful that some Section 1260H List entities are also designated on other restricted party lists, which can carry more severe consequences. U.S. Congress On January 29, 2024, two days prior to the publication of the new Section 1260H List, several Senators sent a letter to Secretary of Defense Lloyd Austin pressing DoD "to publish the names of 'Chinese military companies' operating directly or indirectly in the United States, as required by Section 1260H of the Fiscal Year 2021 National Defense Authorization Act." The senators also requested a briefing on why DoD had failed to publish a revised Section 1260H List in 2023 despite the annual requirement to do so. Despite the subsequent publication of the updated Section 1260H List, given the high degree of interest on the Hill regarding this topic, we expect members of Congress will continue to press their request for a briefing on the process for determining how DoD develops, updates and publishes the list. Finally, Congress is also actively considering legislation that could require the Executive Branch to impose more severe restrictions on Section 1260H List entities, e.g., CMIC or SDN blocking sanctions administered by OFAC. The interest by Congress signals that oversight of the matter continues and will likely result in additional congressional activity. Footnotes 1. Section 1260H(d)(1)(B) of the FY 2021 NDAA. 2. Section 1260H(d)(2) of the FY 2021 NDAA. Appendix Entities Identified as Chinese Military Companies Operating in the United States in accordance with Section 1260H of the William M. ("Mac") Thornberry National Defense Authorization Act for Fiscal Year 2021 (Public Law 116-283)** 360 Security Technology Inc. (Qihoo 360) Advanced Micro-Fabrication Equipment Inc. China (AMEC) Aerospace CH UAV Co., Ltd (S-SEA) Aviation Industry Corporation of China Ltd. (AVIC) AVIC Aviation High-Technology Company Limited (AVIC Aviation Hi-Tech) AVIC Heavy Machinery Company Limited (AVIC Heavy Machinery) AVIC Jonhon Optronic Technology Co., Ltd. (AVIC Jonhon) AVIC Shenyang Aircraft Company Limited (AVIC Shenyang) AVIC Xi'an Aircraft Industry Group Company Ltd. (AVIC Xi'an) Jiangxi Hongdu Aviation Industry Co., Ltd. (Hongdu Aviation) Zhonghang Electronic Measuring Instruments Company Limited (ZEMIC) Beijing Megvii Technology Co., Ltd. (Megvii) Beijing Zhidao Chuangyu Information Technology Co., Ltd. (Knownsec) BGI Genomics Co., Ltd. (BGI) Chengdu JOUAV Automation Tech Co., Ltd. (JOUAV) Chengdu M&S Electronics Technology Co., Ltd. (M&S Electronics) China Aerospace Science and Industry Corporation Limited (CASIC) Aerosun Corporation (Aerosun) China Communications Construction Group (Limited) (CCCG) China Communications Construction Company Limited (CCCC) China Construction Technology Co., Ltd. (CCTC) China Electronics Corporation (CEC) China Electronics Technology Group Corporation (CETC) Hangzhou Hikvision Digital Technology Co., Ltd. (Hikvision) China General Nuclear Power Corporation (CGN) China Mobile Communications Group Co., Ltd. (China Mobile Comm) China Mobile Limited (China Mobile) China National Chemical Corporation Ltd. (ChemChina) China National Chemical Engineering Group Corporation (CNCEC) China National Nuclear Corporation (CNNC) China National Offshore Oil Corporation (CNOOC) CNOOC Limited China North Industries Group Corporation Limited (Norinco Group) Inner Mongolia First Machinery Group Co., Ltd. (Inner Mongolia) China Railway Construction Corporation Limited (CRCC) China South Industries Group Corporation (CSGC) Costar Group Co., Ltd. (Costar) China SpaceSat Co., Ltd. (China SpaceSat) China State Construction Engineering Corporation Limited (CSCEC) China State Construction Group Co. China State Shipbuilding Corporation Limited (CSSC) China Marine Information Electronics Company Limited (China Marine Info Elec) China Telecom Group Co., Ltd. (China Telecom) China Telecom Corporation Limited China Telecommunications Corporation China Three Gorges Corporation (CTG) China United Network Communications Group Co., Ltd. (China Unicom) China Unicom (Hong Kong) Limited (China Unicom HK) CloudWalk Technology Co., Ltd (CloudWalk) CRRC Corporation Limited (CRRC) Dawning Information Industry Co., Ltd. (Sugon) Global Tone Communication Technology Co Ltd. (GTCOM) Guizhou Aviation Technical Development Co., Ltd. (Guizhou Aviation Tech) Hesai Technology Co., Ltd. (Hesai) Huawei Investment & Holding Co., Ltd. (Huawei Holding) Huawei Technologies Co., Ltd. (Huawei) IDG Capital Partners Co., Ltd. (IDG Capital) Inspur Group Co., Ltd. (Inspur) NetPosa Technologies, Ltd. (NetPosa) Semiconductor Manufacturing International Corporation (SMIC) Semiconductor Manufacturing International (Beijing) Corporation (SMIC Beijing) Semiconductor Manufacturing International (Shenzhen) Corporation (SMIC Shenzhen) Semiconductor Manufacturing International (Tianjin) Corporation (SMIC Tianjin) Semiconductor Manufacturing South China Corporation (SMIC South China) SMIC Holdings Limited (SMIC Holdings) SMIC Northern Integrated Circuit Manufacturing (Beijing) Co., Ltd (SMIC NICM) SMIC Semiconductor Manufacturing (Shanghai) Co., Ltd (SMIC Shanghai) Shanghai Yitu Network Technology Co., Ltd. (Yitu) ShenZhen Consys Science & Technology Co., Ltd. (Consys) Shenzhen DJI Innovation Technology Co., Ltd. (DJI) Wuhan Geosun Navigation Technology Co., Ltd. (Geosun) Yangtze Memory Technologies Co., Ltd. (YMTC) Zhejiang Dahua Technology Co., Ltd. (Dahua) * Bold typeface indicates that the entity is new to this list as of January 31, 2024

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2nd Circ. Backs Goldman's Victory In 401(k) Self-Dealing Suit
by Gunnar Larson 15 Feb '24

15 Feb '24

Subject: 2nd Circ. Backs Goldman's Victory In 401(k) Self-Dealing Suit 2nd Circ. Backs Goldman's Victory In 401(k) Self-Dealing Suit <https://www.law360.com/newyork/articles/1797894?nl_pk=ac5a3855-e47c-4403-be…> By Kellie Mejdrich The Second Circuit upheld Goldman Sachs' win in a class action from 29,000 employee 401(k) plan participants who said the banking giant violated federal benefits law by including underperforming proprietary investment funds in their investment roster, citing evidence Wednesday of a "robust process" to manage potential conflicts. Order attached | Read full article » <https://www.law360.com/newyork/articles/1797894?nl_pk=ac5a3855-e47c-4403-be…> | Save to favorites » <https://www.law360.com/newyork/articles/1797894?nl_pk=ac5a3855-e47c-4403-be…>

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NYCB Faces Another Class Action Over CRE Challenges
by Gunnar Larson 15 Feb '24

15 Feb '24

NYCB Faces Another Class Action Over CRE Challenges <https://www.law360.com/newyork/articles/1797651?nl_pk=ac5a3855-e47c-4403-be…> By Brent Godwin A New York Community Bank investor has brought a proposed class action alleging that executives falsely boasted of the bank's financial condition after making two large acquisitions, when the deals in fact weighed down its balance sheet and led to a significant dividend reduction. Complaint attached | Read full article » <https://www.law360.com/newyork/articles/1797651?nl_pk=ac5a3855-e47c-4403-be…> | Save to favorites » <https://www.law360.com/newyork/articles/1797651?nl_pk=ac5a3855-e47c-4403-be…>

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Ref Says Suspended Fla. Atty Needs To Take Ethics Class
by Gunnar Larson 15 Feb '24

15 Feb '24

Ref Says Suspended Fla. Atty Needs To Take Ethics Class <https://www.law360.com/legalethics/articles/1797945?nl_pk=153d4a8a-6fb9-4a5…> By Carolina Bolado An ethics referee on Tuesday recommended not reinstating a suspended Tampa attorney to the Florida Bar because he failed to complete the ethics training required by the 2021 order that suspended him for making unfounded claims of racial bias against judges and opposing counsel. Report attached | Read full article » <https://www.law360.com/legalethics/articles/1797945?nl_pk=153d4a8a-6fb9-4a5…> | Save to favorites » <https://www.law360.com/legalethics/articles/1797945?nl_pk=153d4a8a-6fb9-4a5…>

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Exxon ESG Proxy Statement Suit May Chill Investor Proposals
by Gunnar Larson 15 Feb '24

15 Feb '24

Exxon ESG Proxy Statement Suit May Chill Investor Proposals <https://www.law360.com/compliance/articles/1796229?nl_pk=ab5ce197-c1fb-4d8e…> Exxon Mobil’s recent use of a Texas federal lawsuit to intimidate shareholders into withdrawing a climate-friendly proxy proposal could inspire more public companies to sue to avoid adopting ESG resolutions — a power move that would chill activist investor participation and unbalance shareholder-corporate relations, say Domenico Minerva and James Fee at Labaton Keller. Complaint attached | Read full article » <https://www.law360.com/compliance/articles/1796229?nl_pk=ab5ce197-c1fb-4d8e…> | Save to favorites » <https://www.law360.com/compliance/articles/1796229?nl_pk=ab5ce197-c1fb-4d8e…>

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Biden's OECD Pick Vows To Warren He'll Avoid Crypto Policy
by Gunnar Larson 15 Feb '24

15 Feb '24

Subject: Biden's OECD Pick Vows To Warren He'll Avoid Crypto Policy Biden's OECD Pick Vows To Warren He'll Avoid Crypto Policy <https://www.law360.com/newyork/articles/1798024?nl_pk=ac5a3855-e47c-4403-be…> By Aislinn Keely A former New York congressman who's been nominated to serve as the U.S. ambassador to a global economic development body has said he'll forgo working on crypto-oriented policy if he's confirmed to the job after Sen. Elizabeth Warren, D.-Mass, expressed concern over his work with cryptocurrency exchange Coinbase. Letter attached | Read full article » <https://www.law360.com/newyork/articles/1798024?nl_pk=ac5a3855-e47c-4403-be…> | Save to favorites » <https://www.law360.com/newyork/articles/1798024?nl_pk=ac5a3855-e47c-4403-be…>

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Exclusive: Morale 'very low' over UNFPA New York staff move to Nairobi | Devex
by Gunnar Larson 15 Feb '24

15 Feb '24

https://www.devex.com/news/exclusive-morale-very-low-over-unfpa-new-york-st… FEB. 15, 2024 BY ANDREW GREEN Moving day is coming for a quarter of the U.N. Population Fund’s New York-based employees, who will begin transitioning to Nairobi next year. And many of the staff members slated to make that move are not happy about it. Staff members found out via email last September after the decision had already been made. The logic is that the agency will be made more efficient and effective by moving its core functions closer to the people it is helping. But some staff members, who spoke to Devex on condition of anonymity, are concerned the decision wasn’t fully thought through. The majority of the people moving to Nairobi are responsible for developing policy and maintaining interagency and intergovernmental relationships — something that’s tough to do remotely, they said. Only 10 members of the policy and technical programs staffers are slated to remain behind in New York, meaning that policy influence and advocacy work could fall disproportionately on that small group. UNFPA officials, for their part, are emphasizing the opportunity the move offers to respond faster to the communities they are supporting. The agency prioritizes reducing maternal mortality, and it will now have a headquarters on the same continent as nine of the 10 countries with the highest rates of maternal mortality. The move is also in line with a growing trend of agencies and NGOs relocating to the global south. Nairobi, in particular, has emerged as a major hub for the U.N., with UNEP and UN-Habitat also headquartered there. Staff members aren’t just voicing their displeasure, though. People who don’t want to move are already looking for other jobs or taking voluntary early separation — moves that threaten to disrupt UNFPA’s work between now and next year’s relocation.

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The 'cynical space' where aid, tech, and militaries intersect | Devex
by Gunnar Larson 15 Feb '24

15 Feb '24

https://www.devex.com/news/the-cynical-space-where-aid-tech-and-militaries-… FEB. 15, 2024 BY MICHAEL IGOE A new report maps the landscape of humanitarian aid data — and finds reason to worry. Data protection, cybersecurity, and information for sale are just a handful of the reasons to ask if the aid sector is doing enough to protect information about the people it serves. Also in today’s edition: A breakdown of aid donors’ sectoral spending, a look at the Munich Security Conference, and some thoughts on “epistemic humility” from billionaire and effective altruist Dustin Moskovitz. Responsibility to protect It’s Thursday, Feb. 15. Do you know where your data is? Humanitarian aid groups collect a lot of data: biometrics, phone numbers, identification cards, ethnic and religious identity, financial information, geolocation, dietary habits, family size, history of gender-based violence, birth and death certificates, medical data. Sometimes it’s even a condition for providing assistance, and in many cases the humanitarian sector says it is essential for getting the right support to the right people. But as data collection has proliferated, so have questions about privacy, security, and proper use of people’s personal information, my colleague Sara Jerving reports. Sara has the first look at a new report — released today — from Giulio Coppi at Access Now which maps the relationships between private technology companies and international humanitarian organizations. The map that Coppi has drawn is not a particularly comforting one. He finds “an opaque world, increasingly consolidated in few hands, dealing in the data of the world’s most vulnerable and providing fertile ground to greedy data brokers and intermediaries.” It’s a world that’s vulnerable to cyberattacks, exposed to a global economy in which the “rare datasets” gathered by aid groups can be valuable financial commodities, and populated by numerous players, each collecting different types of data through overlapping platforms under shifting rules and ethical norms. “There cannot be meaningful consent when your life depends on giving away your data,” Coppi says.

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Insurer Wants Out Of Covering SC Club Shooting
by Gunnar Larson 15 Feb '24

15 Feb '24

Insurer Wants Out Of Covering SC Club Shooting <https://www.law360.com/insurance/articles/1797643?nl_pk=59612751-8689-4b1e-…> By Riley Murdock A Nationwide unit has told a South Carolina federal court it doesn't have to defend a nightclub operator against a former patron's negligence suit, arguing that an assault and battery exclusion in its liquor liability policy bars coverage for the claimant's shooting-related injuries. 2 documents attached | Read full article » <https://www.law360.com/insurance/articles/1797643?nl_pk=59612751-8689-4b1e-…> | Save to favorites » <https://www.law360.com/insurance/articles/1797643?nl_pk=59612751-8689-4b1e-…>

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Capital One Accused Of Hiding Savings Account Changes
by Gunnar Larson 15 Feb '24

15 Feb '24

Capital One Accused Of Hiding Savings Account Changes <https://www.law360.com/banking/articles/1798049?nl_pk=feb6bbba-7878-4d39-be…> By Henrik Nilsson Capital One concealed from existing account holders that it offered new customers superior high-yield savings account options while also cutting interest rates on older accounts to reap financial benefits, according to a proposed class action filed Wednesday in California federal court. Complaint attached | Read full article » <https://www.law360.com/banking/articles/1798049?nl_pk=feb6bbba-7878-4d39-be…> | Save to favorites » <https://www.law360.com/banking/articles/1798049?nl_pk=feb6bbba-7878-4d39-be…>

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