A recent letter from Senator Patrick Leahy (D-VT) created expectations that the U.S. Securities and Exchange Commission (“SEC”) had drafted and circulated its long-awaited final rule on conflict minerals. These expectations now seem to have been premature.
In mid-February, Senator Leahy and other co-sponsors of the conflict minerals provision -- Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act -- sent a letter to the SEC (.pdf) that was interpreted to imply that the SEC had drafted a final rule and shared it with lawmakers, which caused a flurry of speculation regarding the content and timing of the final rule.
The letter addressed a number of substantive issues, arguing that the final rule should not allow companies to state that their due diligence findings were “indeterminate” and requesting that the Conflict Minerals Report that some companies will be required to produce be filed, not furnished, as part of the companies’ SEC annual reports. It was assumed that the Senators were writing after reviewing a copy of a final rule.
The SEC has since stated that it has not produced a final conflict minerals regulation, nor has it shared such a document with any lawmakers. It is possible that Senator Leahy’s letter was simply addressing concepts that the Senators thought might be included in the draft rule.
Speculation regarding what the Senators saw – if anything -- will doubtless continue, but it is unlikely that a final conflict minerals rule will be immediately forthcoming. In early March, SEC Chairman Mary Schapiro stated that she was hopeful that the rule would be finalized in the "next couple of months." Notably, she indicated that there will be a "phase-in" period for the regulations. Specifically, Chairman Schapiro stated,
"We will have a phase-in period, I don't know how long, that will... give sufficient time for some of the supply chain due diligence mechanisms to be developed and put in place."
As we noted in a previous post, the final rule was originally scheduled to be issued no later than April 15, 2011, but the SEC has postponed issuing its final rule several times.