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© tom-schmucker-dreamstime.com Analysis | April 16, 2014

Court says disclosure of conflict minerals violates free speech

The U.S. Court of Appeals for the District of Columbia Circuit ruled that a section of the U.S. Securities and Exchange Commission’s (SEC’s) conflict minerals reporting rule violates the First Amendment.
Senior Circuit Judge A. Raymond Randolph cited both the Dodd-Frank law and the SEC regulation in his ruling, writing that they “violate the First Amendment to the extent the statute and rule require regulated entities to report…on their website that any of their products have not been found to be…DRC conflict free.”

But he rejected claims by the three groups that filed the lawsuit — the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers — that the SEC conducted a flawed rulemaking and failed to weigh the costs of new regulations.

The rule will now go back to a lower court to determine whether the wording in the SEC’s rule, or the Dodd-Frank Wall Street reform law underpinning it, is to blame for the free speech violations.

Although the rule and law are in legal limbo, companies may still face supply chain inquiries regarding conflict minerals. In November 2012, a number of large electronics original equipment manufacturers (OEMs) including Advanced Micro Devices, Inc., Dell, General Electric, Hewlett-Packard, Intel Corporation, KEMET Electronics Corp, Microsoft Corporation and Motorola Solutions signed a statement that they would, “continue to work together to eliminate the link between violence and human rights abuses and the mineral trade in the Democratic Republic of the Congo (DRC) and surrounding countries regardless of the lawsuit.”

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