SEC Issues Partial Stay of Conflict Minerals Rule

Following the publication of our alert earlier today,¹ the Securities and Exchange Commission (SEC) issued a partial stay of its conflict minerals rule.²  The SEC’s order stayed the effectiveness of only those portions of Rule 13p-1 under the Securities Exchange Act of 1934, as amended, and Form SD that would require issuers to make statements in conflict minerals reports that the U.S. Court of Appeals for the District of Columbia Circuit held would violate the First Amendment. Thus, only the requirement that issuers report in a conflict minerals report to be filed with the SEC and posted on the issuer’s publicly available website that any of their products have “not been found to be ‘DRC conflict free’” is stayed. The stay will remain in place pending conclusion of the litigation involving the rule. In addition, the order denied the motion for stay filed with the SEC by the appellants in the case before the DC Circuit Court of Appeals, who had petitioned the SEC to stay the effectiveness of the entire rule.

The SEC’s order is consistent with the recent statement published by the Director of the SEC’s Division of Corporation Finance (CorpFin) in response to the court’s ruling (Statement)³ that indicated June 2, 2014 remains the deadline for issuers to file any required Form SDs and conflict minerals reports and indicated that the CorpFin staff expects that filed Form SDs and conflict minerals reports will comply with and address those portions of the conflict minerals rule that the court upheld. The Statement also provided some guidance on the disclosure to be provided in Form SDs and conflict minerals reports in light of the court’s ruling. In fact, the SEC’s order notes that issuers seeking more detailed guidance regarding compliance with the rule should review the Statement and any additional guidance to be provided.

Although there may be additional developments regarding the rule, for the time being issuers working to finalize their Form SDs and conflict minerals reports must continue to prepare for the filing of their reports by the June 2, 2014 deadline in accordance with the guidance provided in the Statement. 

1. Please see our client alert dated May 2, 2014, The Conflict Minerals Rule: Important Recent Developments.

2. See SEC, Order Issuing Stay In the Matter of Exchange Act Rule 13p-1 and Form SD, Rel. No. 34-72079 (May 2, 2014), available at http://www.sec.gov/rules/other/2014/34-72079.pdf.

3. See Keith F. Higgins, Director, SEC Div. of Corp. Fin., Statement on the Effect of the Recent Court of Appeals Decision on the Conflict Minerals Rule (Apr. 29, 2014), available at http://www.sec.gov/News/PublicStmt/Detail/PublicStmt/1370541681994.