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Statement on the Effect of the Recent Court of Appeals Decision on the Conflict Minerals Rule

Author: Keith F. Higgins, SEC© Division of Corporation Finance
Published: April 29th, 2014

On April 14, 2014, the United States Court of Appeals for the District of Columbia Circuit issued a decision in National Association of Manufacturers, et al. v. SEC, et al..

That case involved a challenge to Exchange Act Rule 13p-1 and Form SD. Rule 13p-1 and Form SD were adopted pursuant to Exchange Act Section 13(p), which was added by Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  The Court of Appeals rejected all of the challenges to the rule based on the Administrative Procedure Act and the Securities Exchange Act of 1934. The Court, however, concluded that Section 13(p)(1) and Rule 13p-1 “violate the First Amendment to the extent the statute and rule require regulated entities to report to the Commission and to state on their website that any of their products have ‘not been found to be “DRC conflict free. In so concluding, the Court specifically noted that there was no “First Amendment objection to any other aspect of the conflict minerals report or required disclosures.” In an order issued concurrently with the decision, the Court of Appeals withheld the issuance of its mandate until seven days after disposition of any timely petition for rehearing or petition for rehearing en banc. As a result, the earliest date on which the Court’s mandate is likely to issue is June 5, 2014. Under Rule 13p-1, the first reports are due to be filed on June 2, 2014.

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