Securities and Exchange Commission Issues Statement on DC Court Of Appeals Decision on Conflict Minerals Rule

五月 1, 2014

 

This is a further update to our coverage of the final rules adopted by the Securities and Exchange Commission (the “Commission”) for the implementation of Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires issuers who file annual reports with the Commission to provide annual disclosure regarding their use of “conflict minerals” (the “Final Rule”). For a complete discussion of the conflict minerals disclosure requirements, please see our prior client alerts (see OMM August 22, 2012, Client Alert: SEC Adopts Conflict Minerals Disclosure Requirements; see also OMM June 3, 2013, Client Alert: SEC Staff Publishes FAQs on Conflict Minerals Disclosure).

On April 14, 2014, the U.S. Court of Appeals for the D.C. Circuit (the “DC Court”) issued an opinion1 that unanimously upheld the Final Rule under the Administrative Procedure Act, but invalidated the requirement that an issuer provide disclosure, using the phrase “not been found to be DRC conflict free,” if its products contain metals mined in the Congo or other conflict jurisdictions (see OMM April 24, 2014, Client Alert: DC Circuit Decision Holds Aspect of Conflict Minerals Disclosure Rule Violates First Amendment, Creating Uncertainty on Rule Implementation).

On April 29, 2014, the Commission’s Division of Corporation Finance issued a statement on the DC Court’s decision. Issuers will be required to comply with the Final Rule and file a Form SD by the June 2, 2014 deadline, but will not be required to describe their products as “DRC conflict free,” having “not been found to be ‘DRC conflict free,’” or “DRC conflict undeterminable.” Also, pending further action, companies will not be required to obtain an independent private sector audit unless they voluntarily describe their products as “DRC conflict free.”

[1] National Association of Manufacturers et al. v. Securities Exchange Commission, No. 13-5252, available here.

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