The lawsuit asks that the SEC’s Conflict Minerals Rule be set aside.
Last August, the SEC adopted the Conflict Minerals Rule, following to section 1502 of the Dodd Frank Wall Street Reform and Consumer Act. The rule requires that publicly traded companies disclose certain conflict minerals, including include tin, tungsten, tantalum and gold, or derivatives used in their production processes. This follows the US government’s ruling that these minerals are financing the conflict in the Democratic Republic of the Congo (DRC) and surrounding countries.
The lawsuit states: “The Securities and Exchange Commission’s (SEC’s) “conflict minerals” rule may have been motivated by good intentions – to reduce funding to armed groups and help end the terrible conflict in the Democratic Republic of the Congo (DRC). As the dissenting Commissioners pointed out, however, good intentions are no substitute for rigorous analysis, and the Commission’s analysis here was woefully inadequate."
The industry associations, supported by the ACA, argue that the SEC failed to meet its statutory obligation to consider the effects of the rule by failing to determine if the rule would benefit the DRC, and by underestimating the rule’s costs. As well as this, the SEC expanded the scope of the rule adding significant burdens and costs to US industry without demonstrating any benefit for the DRC or the Congolese people.
The industry coalition also challenged the requirement for companies to undertake an onerous “reasonable country of origin inquiry,” expanding the rule’s scope to non-manufacturers, and providing for an irrational transition period. Lastly, the industry associations assert that the rule violates the First Amendment by requiring companies to report on their website and to the SEC if any of their products are “not DRC conflict free”.
The SEC is expected to respond on 1 March 2013.
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