The SEC scored a victory in the U.S. Court of Appeals for the District of Columbia Circuit in a case filed in October 2012 by the U.S. Chamber of Commerce, the Business Roundtable, and the National Association of Manufacturers. The plaintiffs challenged the SEC’s rule on disclosure of the use of conflict minerals on grounds that aspects of the rule were arbitrary and capricious under the Administrative Procedure Act and claiming that the disclosures required by the SEC and by Congress run afoul of the First Amendment. In a 63-page decision in favor of the SEC, the Court found no problems with the SEC’s rulemaking and disagreed that the “conflict minerals” disclosure scheme transgressed the First Amendment.
Our client alert discussing the adoption of the conflict minerals rule is available here. Issuers subject to the conflict minerals rule first became required to comply with the rule for the calendar year that began January 1, 2013 and must file their first reports on new Form SD by May 31, 2014. The calendar-year reporting requirement applies to all issuers no matter what their fiscal year may be.
For companies that were on the sidelines either hoping the case would lead to a delay or a de minimis reporting exception, a proactive approach to meet the fast approaching May 2014 reporting deadline is now advisable. That group is sizeable as the Wall Street Journal this week reported that two-thirds of respondents to a new survey say their companies are in the early stages or have not yet started compiling information needed to meet the SEC’s requirements for conflict minerals reporting. A copy of the article is available here.