Conflict Minerals Reports Due June 2 Despite Court Ruling, SEC Says
The Securities and Exchange Commission has said it expects the conflict minerals reports due June 2 to be submitted on time despite a recent court ruling that overturned one aspect of the SEC’s conflict minerals regulations. Two SEC commissioners had called on the agency to suspend all conflict minerals reporting requirements until there is a final outcome in a lawsuit challenging those requirements.
Keith Higgins, director of the SEC’s Division of Corporation Finance, pointed out in an April 29 statement that the U.S. Court of Appeals for the District of Columbia Circuit rejected all but one of the challenges to the SEC’s conflict minerals regulations. The court did find that the requirement for regulated entities to report on their Web sites any of their products that have not been found to be “DRC conflict free” violates the First Amendment, Higgins said, but also noted that there was no First Amendment objection to any other aspect of the conflict minerals reports or required disclosures. Further, Higgins noted, the appeals court’s mandate is not likely to issue until June 5 at the earliest, whereas the first conflict minerals reports are due by June 2.
As a result, the SEC expects such reports to be filed on or before that date and to comply with and address those portions of the SEC regulations that the court upheld, subject to the following guidance.
- Companies that do not need to file a conflict minerals report should disclose and briefly describe their reasonable country of origin inquiry.
- For companies required to file, the conflict minerals report should include a description of the due diligence the company undertook.
- No covered products will have to be identified as “DRC conflict undeterminable” or “not found to be ‘DRC conflict free,’” but companies should disclose for such products the facilities used to produce the conflict minerals, the country of origin of the minerals and the efforts to determine the mine or location of origin.
- No company is required to describe a product as “DRC conflict free,” but such descriptions will be permitted if the company has obtained an independent private sector audit (IPSA).
- Pending further action, an IPSA will not be required in any other circumstance.