|
Press Release: On April 14, 2014, the U.S. Court of Appeals for the District of Columbia Circuit issued its opinion in the appeal of National Association of Manufacturers (NAM), et. al., versus the Securities and Exchange Commission (SEC). NAM had challenged several aspects of the SEC’s disclosure rules implementing the conflict minerals provisions of the Dodd-Frank Act. While the court rejected most of those claims, it held that requiring certain companies to publicly report that their products have “not been found to be ‘DRC Conflict-Free’” violates the First Amendment by unconstitutionally compelling speech. The other provisions of the rule remain in place. These require that companies covered by the rule – public companies that file reports with the SEC – report to the SEC about the origin of the conflict minerals they use. The conflict minerals are tin, tantalum, tungsten and gold. In addition, companies covered by the law must exercise due diligence regarding their supply chains if the conflict minerals they use may have originated in the Democratic Republic of the Congo (DRC) or an adjoining country. The requirement that, after performing supply chain due diligence, companies then publicly report if any of their products have “not been found to be ‘DRC conflict free’” is the only provision that the Court found to be unconstitutional. According to the Court, this requirement compels specific speech, instead of allowing companies to use their own language to describe their products. In the Court’s words, “[b]y compelling an issuer to confess blood on its hands, the statute interferes with that exercise of the freedom of speech under the First Amendment.” The ruling does not change the requirement that a disclosure must be made to the SEC if a company determines that its products contain minerals tainted by conflict. The disclosure, however, may be in language that the company chooses. The case has been returned to the District Court for further proceedings. The coming weeks will determine the full impact of the ruling, as the parties to the litigation decide how to proceed. Should either party request it, the Court might grant a re-hearing on the matter before the full Court of Appeals for the D.C. Circuit. In the meantime, companies covered by the law will continue to prepare their SEC filings. These companies will only be able to comply with the requirements of Dodd-Frank if they have the cooperation of their direct and indirect suppliers. Therefore, businesses in the supply chains of covered companies will continue to be called upon to provide information about mineral origin, and to implement responsible supply chain processes. Besides raising the free speech issue, the appellants challenged several other aspects of the law. For example, they argued that the SEC erred by not including an exception in its Rules for de minimis uses of conflict minerals. They also asserted that the statute should apply to companies that “manufacture” with conflict minerals, but not to those that only “contract to manufacture.” Additionally, they contended that the SEC’s cost and benefit analysis regarding the rule was insufficient. The Court of Appeals rejected all of these claims. The Jeweler's Vigilance Committee (JVC) has published a summary of the main points of the court decision, which will be available at www.jvclegal.org. Also available on the website is JVC’s Supply Chain Assurance Kit. The do-it-yourself kit is designed to help suppliers of gold and tungsten implement assurance programs, and thus meet customer requirements regarding mineral origin and responsible supply chains. Any questions on Dodd-Frank and conflict minerals can be directed to Suzan Flamm at suzan-at-jvclegal.org. To keep up to date with JVC updates and events, be sure to follow us on Twitter @jvclegal and visit our website, www.jvclegal.org.
Jewelers Vigilance Committee, founded in 1917, is a not-for-profit legal trade association fulfilling its mission to maintain the jewelry industry’s highest ethical standards. JVC offers dispute mediation and arbitration services for trade and consumers, compliance monitoring and precious metals testing, among many other services. JVC, long considered the industry’s guardian of ethics and integrity, is a resource for the entire jewelry industry and its customers as well as an industry representative before government agencies, media and adjunct fields. For more information visit: www.jvclegal.org.
Rapaport News is not responsible for, and does not endorse, the content of any third-party press release. This is not a Rapaport Press Release. It has been provided as additional information for our clients.
|