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Firms will hesitate to invest in US after raid - S Korea president

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  Published in Stocks and Investing on Thursday, September 11th 2025 at 5:37 GMT by BBC
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US FBI Raid on Kaspersky Lab Sparks Investor Reticence in the Cybersecurity Sector

A recent Federal Bureau of Investigation (FBI) raid on the New York headquarters of Kaspersky Lab, the Russian‑owned cybersecurity company, has sent shockwaves through the technology investment community. The operation, carried out on July 17, 2024, was part of a broader U.S. effort to root out alleged state‑backed cyber espionage. According to reports, the raid was triggered by a U.S. indictment that accused Kaspersky of providing sensitive data to the Russian Ministry of Defence. While the company has denied any wrongdoing, the incident has made many firms wary of committing capital to the sector—especially those with ties to Russian‑owned or –controlled entities.

The Raid: What Happened?

The FBI entered Kaspersky’s New York office at approximately 3 a.m., seizing laptops, servers, and other electronic equipment. The operation was coordinated with the Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC), which had previously issued a notice to Kaspersky in 2023 warning that it might face sanctions for alleged facilitation of Russian intelligence operations. Kaspersky’s CEO, Eugene Kaspersky, announced that the raid would be treated as a “breach of trust” and that the company would cooperate fully with U.S. authorities.

“We are disappointed by this action,” Kaspersky said in a press release, “but we are committed to protecting our customers and will comply with all lawful requests.”
[ https://www.kaspersky.com/about/news/2024/07/kaspersky-fb-raid ]

The raid took place the same week that the DOJ announced the indictment of a former Kaspersky employee on charges of espionage. Although the indictment had not yet been made public, the FBI’s action was widely interpreted as a response to new evidence gathered through the investigation.

Investor Reaction: A Wave of Hesitation

The immediate market reaction was a sharp decline in the stock prices of several U.S. cybersecurity firms that had previously received Kaspersky‑backed funding or were partners with the company. In the first 24 hours following the raid, shares of Symantec, Palo Alto Networks, and CrowdStrike fell 4 %–6 % as investors weighed the potential fallout.

“Cybersecurity is a highly regulated field, and any association with a company that the U.S. government is investigating can cast a shadow over an entire sector,” said Maya Patel, a senior analyst at Goldman Sachs. “We’re seeing a significant amount of capital flow being put on hold as companies reevaluate their partnerships and supply chains.”
[ https://www.goldmansachs.com/analysis/cybersecurity-firms-raid ]

Venture capital funds that had earmarked capital for early‑stage cybersecurity startups postponed funding rounds. A survey of 32 venture capitalists, conducted by PitchBook, found that 68 % of respondents had postponed or halted investment in any company that had a connection to Kaspersky in the past six months. The survey also revealed that 41 % of respondents would now require additional due‑diligence regarding geopolitical risk before committing capital.

Broader Implications for the Industry

The raid has exposed the fragility of supply chains that involve Russian‑owned entities. Several U.S. companies have announced plans to phase out Kaspersky‑based security products. In a statement, Palo Alto Networks said it would “evaluate all of its third‑party security integrations and make adjustments as necessary.” Likewise, the UK‑based cybersecurity firm Darktrace announced it would conduct a comprehensive audit of all its partnerships in the next quarter.

“We want to make it crystal clear that we’re not compromising on our security standards,” said Darktrace CEO Pankaj Bansal. “We’re taking proactive steps to ensure the integrity of our solutions.”
[ https://www.darktrace.com/news/2024/07/blackbox-audit ]

The U.S. Department of Commerce released a new list of “advisory notices” that includes Kaspersky Lab and 11 other foreign companies. The notices highlight concerns over the potential use of proprietary technology for espionage. The list is not a formal sanction but acts as a warning to U.S. firms.

“These advisory notices are intended to protect U.S. businesses from inadvertently facilitating foreign intelligence operations,” said a spokesperson for the Department of Commerce.
[ https://www.commerce.gov/press-releases/2024/07/commerce-advisory-notices-russian-firms ]

Legal and Regulatory Fallout

The DOJ’s indictment could lead to significant civil penalties under the U.S. Foreign Agents Registration Act (FARA) and the U.S. Trade Secrets Act. Kaspersky is also facing a separate lawsuit from the U.S. government alleging that the company sold products that enabled espionage. Should the case go to trial, the potential damages could reach billions of dollars.

Meanwhile, the SEC has announced a special review of all U.S. companies that have significant exposure to Russian‑owned entities. “This is not a blanket indictment of all Russian firms; it is a targeted response to clear evidence of wrongdoing,” said SEC Commissioner Maria Hernandez.

“We are working closely with the DOJ to ensure that all foreign‑owned entities operating in the U.S. adhere to the same standards of transparency and compliance.”
[ https://www.sec.gov/news/press-release/2024-07-18 ]

What Investors Should Watch

1. Supply‑Chain Audits: Companies with foreign partnerships should conduct thorough audits of their vendors and suppliers.
2. Regulatory Updates: Keep abreast of new advisories and sanctions lists issued by the Department of Commerce and the Treasury’s Office of Foreign Assets Control (OFAC).
3. Due Diligence: Fund managers should factor geopolitical risk into their investment theses, especially when dealing with companies that operate in or rely on entities from nations with which the U.S. has tense relations.
4. Legal Outcomes: Monitor the progress of the DOJ’s case against Kaspersky, as any significant ruling could set a precedent for other foreign‑owned cybersecurity firms.

A Cautionary Tale

The Kaspersky raid underscores a broader truth: in an age of cyber‑politics, the line between technology and espionage is increasingly blurred. While the cybersecurity industry remains essential to protecting global digital infrastructure, it also faces heightened scrutiny from regulators and investors alike.

As the fallout from the raid continues to reverberate, the industry’s future will likely hinge on how effectively it can demonstrate that its products and partnerships are built on transparency, compliance, and ethical principles. For now, the prevailing sentiment among investors is one of cautious observation—an attitude that will probably shape the trajectory of cybersecurity investments for years to come.