Tag Archives: Dodd-Frank

Senate hearing on conflict minerals law reveals common theme

by Cydney Posner

On April 5, just prior to the release of  Corp Fin’s Updated Statement on conflict minerals, the Senate Subcommittee on Africa and Global Health Policy held a hearing on the effects on the Democratic Republic of the Congo of Section 1502 of Dodd-Frank and the SEC’s related conflict minerals rule, examining the approach taken in the rule and its achievements.  The hearing comes as Congress considers whether and how to revise Section 1502.  While the witnesses were divided in their views of the value of Section 1502, surprisingly, there was something of a common theme — that the illicit trade in conflict minerals is more a symptom of the problem in the DRC region, not at the root, and that addressing the trade issue alone will not suffice.  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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Will the SEC be instructed to waive any or all of the conflict minerals requirements on the basis of national security interests? (Updated)

by Cydney Posner

Remember all the way back to last week when Acting SEC Chair Michael Piwowar issued two statements on the conflict minerals rules?  (See this PubCo post.) Remember too that the first statement directed the staff to revisit the 2014 guidance from the director of corp fin regarding conflict minerals, and that, in the additional statement, he talked about what he had learned in his recent trip to Africa? In that additional statement, he concluded that the rule was “misguided,” had led to “a de facto boycott of minerals from portions of Africa” and was putting legitimate mining operators out of business because of the onerous costs of compliance with the rules. Now here’s critical sentence: “Moreover, the withdrawal from the region may undermine U.S. national security interests by creating a vacuum filled by those with less benign interests.” Apparently, that sentence may well have sent a signal to the White House.

According to an exclusive report from Reuters, the President “is planning to issue an executive order targeting [the conflict minerals disclosure rule],” and while Reuters did not know the precise contents or timing of that order— including how broadly it might apply and whether or not it could implicate reporting due in May 2017— the suggestion is that it would be based on the national security waiver provision in Dodd-Frank.  That provision (Exchange Act Section 13(p)(3)) requires the SEC to revise or temporarily waive the basic requirements of the conflict minerals provisions “if the President transmits to the Commission a determination that—(A) such revision or waiver is in the national security interest of the United States and the President includes the reasons therefor….”  While the exemption would be limited by statute to two years, the conflict minerals provision in Dodd-Frank is one that was identified for repeal in the original Financial CHOICE Act and could be jettisoned under the Financial Choice Act 2.0 — if it passes through Congress unscathed that is. (See this PubCo post.)

As of now, conflict minerals filings are still due on May 31 and, until the timing and precise details of the reported executive order become known, it is still too soon— and too uncertain at this point— to say “pencils down” on conflict minerals disclosure. Nevertheless, companies that are subject to the conflict minerals requirements should stay tuned.

Update of February 9: Thecorporatecounsel.net blog has posted what purports to be  a draft of the executive order.  Is the draft real or is it fake news? That remains an open question for now. (He also links to an interesting piece in Mother Jones.)

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What to make of the latest Executive Order on financial regulation?

by Cydney Posner

As reported all over the place, a new Executive Order has been signed directing the Secretary of the Treasury to consult with the heads of the member agencies of the Financial Stability Oversight Council (which includes the SEC) and report to the President within 120 days identifying “any laws, treaties, regulations, guidance, reporting and recordkeeping requirements, and other Government policies that inhibit Federal regulation of the United States financial system in a manner consistent with the Core Principles.” The “Core Principles” relate to topics such as individual financial empowerment, corporate competitiveness, fostering economic growth through rigorous regulatory impact analysis, making “regulation efficient, effective, and appropriately tailored,” restoring “public accountability within Federal financial regulatory agencies” and rationalizing “the Federal financial regulatory framework.” The Order doesn’t effect any regulatory change by itself; rather, it provides impetus to financial regulators to rethink their regulatory regimes in light of these Principles — not a signal to start their engines. Continue reading

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In her final speech as SEC Chair, White identifies current trends assailing SEC independence

by Cydney Posner

Mary Jo White took the occasion of her final speech as SEC Chair, presented to the Economic Club of New York, to discuss how to maintain the role of the SEC as an effective financial regulator and how the SEC can “continue as a strong independent agency in the current environment.”  What is she getting at? White is concerned that the SEC’s independence from the executive and legislative branches is currently in jeopardy and that, without independence, the SEC’s ability to use its expertise to achieve its mission could be compromised. Continue reading

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Hitting populist note, U.K. proposes enhancements to corporate governance — will the new U.S. administration follow the populist playbook?

by Cydney Posner

One of the prevailing narratives of the recent Presidential election was that the same gestalt that drove the Brits to vote for Brexit also animated the pro-Trump forces and led to his presidential victory.  Why then, when it comes to regulation of corporate conduct, do the two countries appear to be headed in such different directions? Or are they? Continue reading

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Undo Dodd-Frank?

by Cydney Posner

With Congress and the Presidency soon in Republican control, look for the Financial CHOICE Act (or perhaps an enhanced version) to be re-introduced in the next Congress.  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 necessary to undo the burdens of Dodd-Frank, which were characterized as a distraction from the SEC’s basic statutory responsibilities. In addition to taking aim at much of Dodd-Frank, among other things, the bill places a heavier burden on proxy advisory firms, regulators and regulations generally and eases some other regulations. Although the bill was never expected to make much progress this year, the NYT suggested that the bill may “help shape the Republican agenda in the next term.” The bill’s chances of becoming law have, well,… to say that they have substantially improved doesn’t quite do the situation justice. In an interview with the WSJ on November 11, Hensarling said “that he planned to make the bill… his top priority next year.” Of course, the Congress may decide to just take a hatchet to Dodd-Frank and various other statutes and rules altogether. Or, alternatively, the Senate Dems could filibuster the Senate version of the bill, or threaten to do so, which could lead to some negotiation. But if the Financial CHOICE  Act is signed into law in substantially the same form, the question then is: will we see more private ordering? Will governance activists begin to submit shareholder proposals for, e.g., pay-ratio and hedging disclosures? Will some companies continue a form of conflict minerals compliance on their own initiatives?

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