Troutman Sanders Files Conflict Minerals Rulemaking Petition
ATLANTA – Troutman Sanders LLP announced today that it has filed a Petition for Rulemaking with the Securities and Exchange Commission with respect to the Conflict Minerals Rules adopted by the SEC in 2012 that were mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Under the Conflict Mineral Rules, companies are required to perform due diligence with respect to the products that they manufacture in order to determine whether any of those products contain so-called "conflict minerals" – columbite-tantalite, cassiterite, gold, and wolframite – and then to further determine whether the source of those minerals is the Democratic Republic of the Congo or an adjacent country. These minerals, including their derivatives tin and tungsten, are used in numerous products, ranging from cell phones and computers to cars and heavy equipment. In requiring the SEC to adopt the Conflict Minerals Rules, Congress explained that the exploitation and trade of conflict minerals by armed groups is helping to finance conflict in the region and that the emergency humanitarian crisis there warrants these requirements as well as related disclosure. Troutman Sanders filed the Petition on its own behalf, and not on behalf of any of its clients. No client has had input into the Petition.
The Petition requests the SEC to consider permitting companies to provide, for a limited period of time, alternative disclosure to the disclosure currently required by the Conflict Minerals Rules. Companies have found compliance with the Conflict Minerals Rules to be extremely time-consuming and difficult, and many are struggling to meet the requirements of the Conflict Minerals Rules in the time period required. The proposed alternative disclosure would allow companies to provide investors with a transparent view into the companies' efforts to comply and give companies additional time to implement the needed systems and processes for compliance.
Brinkley Dickerson, a securities partner with Troutman Sanders, commented, "For many companies, compliance with the Conflict Minerals Rules has been problematic. At the time that the SEC adopted the Conflict Minerals Rules, companies did not have in place systems for identifying which of the conflict minerals were contained in their products, and the rules apply equally, regardless of how little the amount included may be. Similarly, since the conflict minerals are often added to products by upstream suppliers, companies are dependent upon input from their suppliers in order to determine whether conflict minerals are contained in their products and, if so, where they were sourced."
Dickerson added, "There is no question that companies need additional time to comply with these complex rules and make the required disclosures, and we thought that it was important to raise this issue with the SEC. In our Petition, we are proposing an alternative to the currently required disclosure that we believe meets the SEC's objective of providing investors with good disclosure, yet at the same time relieves the pressure on companies to make premature disclosure. We believe that the proposed alternative is in the best interest of both the companies that are subject to the Conflict Minerals Rules and the investing public, as it will improve the quality of public disclosure in this area."
A copy of the Petition can be found here.
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