The Securities and Exchange Commission has issued an order staying the effective date for compliance with the some of the conflict minerals rules the agency had drawn up after an appeals court ruled that they violated the First Amendment.
Last month, an appeals court ruled against SEC regulations mandated by the Dodd-Frank Act that would require companies to disclose their use of minerals like gold, tin and tungsten that have fueled conflicts in the Democratic Republic of the Congo and other war-torn parts of Africa (see Court Says SEC Conflict Mineral Rule Violates Speech Rights). Business groups have tried to block the regulations, claiming the disclosures would violate their constitutional right to freedom of speech. The appeals court referred the case back to a lower court to address the free speech issues in the regulations, but rejected some of the other challenges to the conflict minerals rules.
In response to the court ruling, the SEC said Friday it would stay the effective date for compliance with the portions of Exchange Act Rule 13p-1 and Form SD that would require statements by issuers that the Court of Appeals held would violate the First Amendment. However, in its order, the SEC denied the motion filed by the National Association of Manufacturers, Chamber of Commerce, and Business Roundtable for a stay of the entire rule.
The SEC said a stay of these portions of the rule avoids the risk of First Amendment harm pending further proceedings. The Commission also said that staying only these portions of the rule furthers the public’s interest in having issuers comply with the remainder of the rule, which was mandated by Congress and upheld by the Court of Appeals.
For more detailed guidance regarding compliance, the order refers issuers to the statement issued by SEC staff on April 29 and any further guidance subsequently provided.
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