The Obama Administration has issued its first rejection of a transaction under CFIUS. Well, at least most companies would treat it as a rejection. Treasury has informed the parties that if they don't withdraw, CFIUS will recommend rejection of the transaction. Usually that's an opportunity for parties to save a bit of face, so they don't have the stigma of a public veto. But Firstgold isn't taking the hint. Instead, in a remarkable move, they've released a detailed, blow-by-blow memo setting out the conversation with the Deputy Treasury Secretary offering withdrawal. That's not something you do when you're thinking of a quiet exit stage left. Nor is Treasury going to be thrilled to see a quiet conversation retailed in the New York Times.

So either Firstgold and its lawyers don't understand CFIUS or they're spoiling for a fight. If the latter, this will be a test -- an opportunity to show the Administration sticking up for DoD's security interests, but at a cost in potential litigation and diplomatic pressure. That could turn this tiny transaction into a big deal.