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Tin April 18, 2017 02:30:34 AM

SEC formally suspends enforcement of part of the ‘conflict mineral’ rule

ITRI
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The statement explained that "Until these issues are resolved, it is difficult to conceive of a circumstance that would counsel in favor of enforcing Item 1.01(c) of Form SD".
SEC formally suspends enforcement of part of the ‘conflict mineral’ rule

SEATTLE (ITRI.CO.UK):  Mike Piwowar, the Acting Chairman of the U.S. Securities and Exchange Commission (SEC) released a statement on the 7th April 2017 in reaction to the final US Court decision a few days earlier confirming the view that public disclosure of 'conflict' or 'not conflict' products would violate the first amendment of the US constitution.

The statement explained that "Until these issues are resolved, it is difficult to conceive of a circumstance that would counsel in favor of enforcing Item 1.01(c) of Form SD". Note that Item 1.01(c) contains the due diligence requirements and therefore it appears that downstream US companies will not be required to conduct a due diligence review or an audit, but will still need to provide reports and do origin inquiries, as they have been doing. The move sparked backlash from SEC Democratic Commissioner Kara Stein, who accused Piwowar of acting beyond his authority to change parts of the Rule mandated by Congress, adopted by the SEC and reviewed by the courts.

"It is unprecedented for one commissioner, acting alone and without official notice and comment, to engage in de facto rulemaking," she said. The SEC will now be asked to determine how to address the Court of Appeals decision including whether Congress's original intent can be achieved while avoiding the constitutional problem confirmed by the Court. Separately, the Department of State has recently requested comment on how best to support the responsible sourcing of 'conflict minerals'. 

Courtesy: www. itri.co.uk