Tag Archives: conflict minerals

Letter from six senators challenges authority of Acting SEC Chair on conflict minerals no-action position

by Cydney Posner

It’s not only the NGOs that have expressed their dismay at the no-action position taken by Corp Fin and Acting SEC Chair Michael Piwowar with regard to compliance by companies with the conflict minerals rule. In this April 26 letter, six U.S. Senators express their doubt about the “legal basis” for the Acting Chair’s “unilateral move” to halt enforcement of the rule. Continue reading

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GAO issues annual report showing only slight progress in disclosures on conflict minerals

by Cydney Posner

The GAO has recently issued its third annual report on conflict minerals. The GAO is required by Dodd-Frank to report annually on the effectiveness of the SEC’s conflict minerals rule in promoting peace and security in the DRC and adjoining countries  (the “covered countries”) as well as on the rate of sexual violence in war-torn areas of the covered countries. (To read about last year’s report, see this PubCo post.) One sentence in the report says it all: “Our review of companies’ conflict minerals disclosures filed with SEC in 2016 found that, in general, they were similar to disclosures filed in prior years.” In light of the provision in the Financial CHOICE Act of 2017 that would repeal the Dodd-Frank conflict minerals mandate, you have to wonder if this will be the GAO’s last report on the topic?  (See this PubCo post.) Continue reading

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It’s baaaack — the Financial CHOICE Act of 2017

by Cydney Posner

A draft of the Financial CHOICE Act of 2017 (fka version 2.0), a bill to create hope and opportunity for investors, consumers, and entrepreneurs — a masterpiece of acronyming — has just been released (and weighs in at 593 pages).   The bill, sponsored by Jeb Hensarling, Chair of the House Financial Services Committee, was framed as a Republican proposal to reform the financial regulatory system and relieve the affliction of Dodd-Frank. In addition to taking aim at much of Dodd-Frank, among other things, the bill places a heavier burden on regulators and proxy advisory firms generally, eliminates a lot of studies and repeals or eases a number of regulations. A hearing in the House has been scheduled for this week. The bill never made much progress when it was originally introduced last year (as version 1.0), but with Congress and the Presidency now in Republican hands, its chances of survival in some form are immensely greater.  Of course, the Senate Dems could filibuster — assuming, that is, that the legislative filibuster survives that long — the Senate version of the bill, or threaten to do so, which could lead to some negotiation.

While the vast majority of provisions in the draft bill relate to the banking provisions of Dodd-Frank and the Consumer Financial Protection Bureau, some are related to new requirements for agency rulemaking, capital formation, compensation and corporate governance matters, and other matters of interest. Selected provisions are summarized below: Continue reading

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Responses to Corp Fin’s Updated Statement on Conflict Minerals

by Cydney Posner

A number of NGOs have issued statements emphatically rejecting Corp Fin’s  Updated Statement on the Effect of the Court of Appeals Decision on the Conflict Minerals Rule and the Acting Chair’s separate Statement on conflict minerals (see this PubCo post) and calling for companies to disregard them and file their conflict minerals reports as usual. How will companies respond? Continue reading

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Corp Fin provides relief on conflict minerals in light of final judgment in National Association of Manufacturers v. SEC

by Cydney Posner

Today, in light of the entry of final judgment by the D.C. District Court in National Association of Manufacturers v. SEC, Corp Fin issued an Updated Statement on the Effect of the Court of Appeals Decision on the Conflict Minerals Rule that provides substantial relief to companies subject to the rule. You may recall that, in that case, the Court held that a part of the conflict minerals rule violated the First Amendment. Corp Fin’s Updated Statement advises that companies will not face enforcement if they perform only a reasonable country-of-origin inquiry and file only a Form SD and do not conduct detailed supply-chain due diligence or prepare and file a conflict minerals report (Item 1.01(c) of Form SD) or have an audit performed — even if they would otherwise be required to do so under the rule. In a separate Statement, Acting SEC Chair Michael Piwowar commented that the “primary function of the extensive and costly requirements for due diligence on the source and chain of custody of conflict minerals set forth in paragraph (c) of Item 1.01 of Form SD is to enable companies to make the disclosure found to be unconstitutional. In light of the foregoing regulatory uncertainties, until these issues are resolved, it is difficult to conceive of a circumstance that would counsel in favor of enforcing Item 1.01(c) of Form SD.” Continue reading

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Final judgment entered in conflict minerals case, National Association of Manufacturers v. SEC

by Cydney Posner

Today, the D.C. District Court entered final judgment in National Association of Manufacturers v. SEC, holding that Section 1502 of Dodd-Frank and Rule 13p-1 and Form SD, Conflict Minerals, violate the First Amendment to the extent that the statute and the rule require regulated entities to report to the SEC and to state on their websites that any of their products “have not been found to be ‘DRC conflict free.’”  In addition, pursuant to the APA, the Court held the rule unlawful and set it aside but only to the extent that it requires regulated entities to report to the SEC and to state on their websites that any of their products “have not been found to be ‘DRC conflict free.’” (For background on the case, see this PubCo post.) Continue reading

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State Department ventures into conflict minerals

by Cydney Posner

Bloomberg BNA is reporting that the State Department has launched a new review of  “how best to support responsible sourcing of conflict minerals,” which will continue through April 28. Although it’s not known whether the SEC is involved in the State Department’s efforts, BNA suggests that the review “could help determine the next step in a potential rethink” of the SEC conflict minerals rule. Continue reading

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