The NSD declines prosecution for the first time under its M&A Policy

White Deer and Unicat

In 2020, White Deer announced its acquisition of Unicat, a supplier of chemical catalyst products and provider of related services to the refinery, chemical, steel, and agriculture industries.³ According to the NSD, during its post-acquisition integration efforts, White Deer discovered evidence of Unicat’s potential violations of U.S. sanctions law and export controls and launched an internal investigation.⁴ The investigation revealed that Unicat’s former CEO had conspired with others to make unlawful sales of chemical catalysts to customers in Iran, Venezuela, Syria, and Cuba. The conspirators also made false statements in export documents and financial records regarding the identities of the customers. The actions violated the Export Control Reform Act and the Export Administration Regulations. Ten months after closing its acquisition of Unicat, White Deer voluntarily disclosed this conduct to the NSD.⁵

In August 2024, Unicat’s former CEO pled guilty to conspiring to violate U.S. sanctions law, as well as to concealment and international promotional money laundering.⁶ In December 2024, the DOJ entered into a non-prosecution agreement (NPA) with Unicat, which agreed to forfeit over US$3 million in proceeds associated with the sanctions law violations.⁷ Also in December 2024, the DOJ declined to prosecute White Deer under the provisions of the NSD M&A Policy.⁸

The added protections of the NSD M&A Policy in practice

Since the NSD Corporate Enforcement Policy was adopted in March 2024, the NSD has declined to prosecute three cases. On May 22, 2024, the NSD declined to prosecute the biochemical company Millipore Signa for a number of export control and smuggling offenses.⁹ The second declination came over a year later, on April 30, 2025, when the NSD announced that it was declining to charge Universities Space Research Association (USRA) after the company voluntarily disclosed potential export-related violations involving an employee’s dealings with China.¹⁰

Unlike the Millipore Signa and USRA declinations, the White Deer declination is explicitly pursuant to the NSD M&A Policy provisions in the broader NSD Corporate Enforcement Policy.¹¹ As set out in the NSD Corporate Enforcement Policy, the factors for declination are largely similar in each of the three cases: (1) timely and voluntary self-disclosure of the misconduct,¹² (2) proactive cooperation with the DOJ’s investigation, and (3) timely and appropriate remediation.¹³ These three factors are discussed in each of the three declination letters.

The NSD M&A Policy affords at least one additional protection: A presumption of non-prosecution is available to bona fide acquirors for conduct of an acquired company even in the presence of aggravating factors, such as the nature and seriousness of an offense, so long as those aggravating factors “do not continue to affect either the acquiror or the acquired entity following a qualifying voluntary self-disclosure.”¹⁴ Under the non-M&A Policy provisions of the NSD Corporate Enforcement Policy, there must be an absence of aggravating factors, e.g. the nature and seriousness of an offense, in order for a company to receive the presumption of non-prosecution.¹⁵ In the case of Millipore Signa, the NSD’s declination decision was informed, in part, by the relatively non-severe nature and seriousness of the offense – specifically, that the chemical compounds unlawfully exported to China in that case “did not present a significant threat to national security in the quantities and concentrations sold and, in most instances, did not require a license for export.”¹⁶ Likewise, in the case of USRA, the NSD found it relevant that the conduct pertained to “only four unlicensed exports of software in violation of the EAR,” and “the software was based on information in a publicly available textbook and classified as EAR99.”¹⁷

Unlike the Millipore Signa and USRA declination letters, the White Deer declination letter did not downplay the relative nature and seriousness of the conduct at issue. In fact, it stated that a declination decision was reached “despite the presence of aggravating factors.”¹⁸ Nevertheless, the NSD determined that declination was still warranted because those aggravating factors were “no longer present at either Unicat or the Unicat Acquirors.”¹⁹

The White Deer declination therefore illustrates the NSD M&A Policy’s additional protections in practice: Acquirors can benefit from the presumption of non-prosecution despite aggravating factors.

Takeaways

The White Deer declination reinforces a general best practice that acquirors should carefully consider conducting sanctions law and export control compliance diligence of a potential acquiree in a pending M&A transaction. In the event that potentially reportable conduct is discovered in pre- or post-acquisition diligence, acquiror companies may be able to benefit from the presumption of non-prosecution in the NSD M&A Policy, notwithstanding the presence of aggravating factors at the acquired company.

Additionally, a recent May 2025 revision to the DOJ Criminal Division’s Corporate Enforcement Policy signals that the NSD may be even further inclined to issue declinations under the Trump administration. The revisions make clear that companies that voluntarily self-disclose, fully cooperate, and timely remediate, in the absence of aggravating circumstances, “will” receive a declination, not just a presumption of non-prosecution, as stated in the NSD Corporate Enforcement Policy.²⁰ It remains to be seen whether the NSD will revise its own Corporate Enforcement Policy, including the M&A Policy provisions, to mirror the revisions made by the Criminal Division.

Authored by Evans Rice, Joshua Kurland, Michael Theis, Jesse Suh, and Cameryn Lonsway.