Legal Alert: Update on the SEC's "Conflict Minerals" Disclosure Rules: D.C. District Court Upholds Court of Appeals Decision
On April 3, 2017, the D.C. District Court affirmed the 2014 decision by the U.S. Court of Appeals for the D.C. Circuit, striking down part of the U.S. Securities and Exchange Commission’s (“SEC”) conflict minerals rules that require publicly-traded companies to disclose whether their products contain certain minerals from certain central African countries.
The District Court held that the conflict minerals rules violate the First Amendment to the extent the rules compel companies to disclose whether their products have been found to be “DRC conflict free.” The District Court remanded the case to the SEC to take action in accordance with its decision.
The Acting Chairman of the SEC’s Division of Corporate Finance has issued updated guidance for companies preparing Form SD filings for calendar year 2016, which are due May 31. The Chairman’s guidance does not rescind Item 1.01(c) or suspend obligations to conduct due diligence or file a Conflict Minerals Report. Companies must continue to comply with the requirements of Items 1.01(a) and (b) of Form SD, which require a description of the company’s “reasonable country of origin inquiry.” However, the Chairman stated that companies will not face enforcement actions if they fail to conduct due diligence on the source and chain of custody of conflict minerals required by Item 1.01(c) of Form SD.
The full SEC statement can be found here. The case is National Association of Manufacturers v. U.S. Securities and Exchange Commission, No. 13-CF-000635 (D.D.C. Apr. 2, 2017).
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