Late Tuesday evening, Acting Chairman Michael Piwowar issued two statements — available here and here — announcing that he was directing the SEC Staff to reconsider whether the 2014 guidance on the conflict minerals rule is still appropriate and whether any additional relief is warranted. As a result, the SEC has created a website where interested parties can submit comments.
Below is the text of one of his statements in its entirety.
In April 2014, the Court of Appeals for the D.C. Circuit held that a portion of the disclosure required by the Commission’s Conflict Minerals Rule violated the First Amendment. Shortly thereafter, the then-Director of the Division of Corporation Finance issued guidance regarding compliance with the Rule in light of the court’s decision and the Commission issued an order staying the effect of the compliance date for those portions of the rule found to be unconstitutional. The case was subsequently remanded to the district court for further consideration. The litigation remains ongoing and the staff’s guidance remains in effect.
In the interim, the temporary transition period provided for in the Rule has expired. And the reporting period beginning January 1, 2017, is the first reporting period for which no issuer falls within the terms of that transition period. In light of this, as well as the unexpected duration of the litigation, I am directing the staff to consider whether the 2014 guidance is still appropriate and whether any additional relief is appropriate in the interim.
I welcome and encourage interested parties to submit detailed comments, and request that they be submitted within the next 45 days.
Although the possibility of some relief is probably welcome news for many issuers having to file a Form SD, the outcome of the reconsideration is still subject to tremendous uncertainty given the timing involved with the Staff reviewing the comments received after the expiration of the 45-day comment period, upcoming change in SEC leadership, Dodd-Frank Act statutory requirements, and ongoing litigation. Therefore, we believe the best course is for issuers subject to Form SD requirements to monitor developments in this area and continue their routine process for their calendar year 2016 conflict minerals reporting obligation due on May 31, 2017.
If you have any questions regarding any of the topics covered in this blog post, please feel free to contact a member of our Corporate & Securities practice group or, if applicable, contact your primary Bass, Berry & Sims relationship attorney.