WASHINGTON, D.C.—Acting Chairman of the U.S. Securities and Exchange Commission (SEC) Michael S. Piwowar issued a statement last week regarding the Court of Appeals Decision on the Conflict Minerals Rule.
According to the statement, the Trump SEC will not aggressively enforce the costliest penalties of conflict minerals disclosures. Piwowar, a Republican, has asked staff for a recommendation on how to proceed with the rule, which requires companies to disclose if their products contain certain minerals from a war-torn part of Africa.
Business groups have long argued that the rule costs companies too much to trace the source of minerals through the supply chain, and forces them to surrender information that is irrelevant to making investment decisions.
In 2014, a U.S. appeals court struck down part of the conflict minerals law after the National Association of Manufacturers, the Business Roundtable, and the U.S. Chamber of Commerce sued the SEC over it. The court found part of it violated free speech rights of companies by forcing them to publicly state that their products were not conflict free.
“The United States Court of Appeals for the District of Columbia Circuit had previously found that the Conflict Minerals rule ‘violate[s] the First Amendment,'” said Piwowar. “Until these issues are resolved, it is difficult to conceive of a circumstance that would counsel in favor of enforcing [the due diligence requirements].”
In the meantime, companies will still be required to file mandatory forms with the SEC and do origin inquiries, as normal.
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