For the avoidance of doubt, Acting Corp Fin Director confirms conflict minerals and pay-ratio disclosure rules still in effect

Cydney Posner

As reported by the WSJ, at the SEC Speaks conference today, to avoid any doubt on the matter, Acting Corp Fin Director Shelley Parratt reminded companies that, notwithstanding the two requests for public comment issued by Acting SEC Chair Michael Piwowar and all of the Executive Orders aimed at deregulation, the conflict minerals and pay-ratio disclosure rules continue in effect (until of course they don’t). The staff is, however, reviewing comments on these rules as they are received.

You’ll remember that a few weeks ago, Piwowar issued two statements — available here and here — on the conflict minerals rules, indicating that he had directed “the staff to consider whether the 2014 guidance is still appropriate and whether any additional relief is appropriate in the interim.”  He also welcomed the submission of public comments.  The two statements made clear that further guidance on the rules was likely to result and that it could involve some type of relaxation of the requirements.  In addition, a purported draft of an Executive Order temporarily waiving the conflict minerals disclosure rule based on the national security waiver provision in Dodd-Frank has been floating around the Internet, although there are not yet any reports that it has been signed. (See this PubCo post.)

Shortly thereafter, Piwowar issued yet another statement directing the Corp Fin staff to revisit the pay-ratio disclosure rule.  This statement likewise sought public input on any unexpected challenges that issuers experienced as they prepared for compliance with the rule and whether relief was needed.  He also directed the staff to reconsider the implementation of the rule based on any comments submitted and to determine whether additional guidance or relief was appropriate.  (See this PubCo post.)

And then there are the two Executive Orders addressing the new administration’s deregulatory efforts, as well as the new one just signed today which, according to the WSJ, requires “each federal agency to form a task force to review existing regulations and recommend whether to repeal or simplify those deemed to harm the economy and job creation.” The newest Executive Order was described as directing federal agencies “to form ‘a real team of dedicated people to research all regulations that are unnecessary, burdensome and harmful to the economy and therefore harmful to the creation of jobs and business.’”  As with the “two-for-one” regulatory rollback Executive Order (see this PubCo post) and the “Core Principles” regulatory rollback Executive Order (see this PubCo post), however, this order may not directly compel the SEC to act because it is an independent regulatory agency. Nevertheless, according to this article in the WSJ, the SEC “has a record of voluntarily complying with executive actions….Past SEC staff on both sides of the aisle said an incoming agency head would be expected to fall in line with the broad philosophy of the administration that appoints them.”

This whirl of activity and commotion may well have caused some to conclude that the rules had already been repealed or suspended. Not so. They may well be at some point, but for now, the clear answer from Ms. Parratt was that they continue in effect. Moreover, unless Congress takes action to repeal the relevant portions of Dodd-Frank, the statute that mandates the rules, the prospect of these or other similar rules continues. If the Financial CHOICE Act 2.0 were signed into law as is, those two provisions of Dodd-Frank (along with others) would be eliminated, but there is no guarantee that, even if passed in the House, the bill would survive unscathed in the Senate, where a filibuster is possible. (See this PubCo post and this PubCo post.)

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