The New SEC Conflict Minerals Rule: Overcoming the Challenges of Compliance


On August 22, the Securities and Exchange Commission (SEC) adopted a controversial and far-reaching rule laying out the obligations that publicly traded companies must meet under the "Conflict Minerals" provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. While directly applicable to SEC-reporting companies, the new requirements will indirectly but significantly involve far more businesses in the rule's implementation process.

The new provisions require SEC-filing manufacturers and companies that "contract for manufacture" to conduct broad-ranging inquiries into their upstream supply chains in furtherance of a congressionally mandated initiative intended to cut off sources of cash for violent warlords in central Africa. If companies find that their products contain even small amounts of gold, tin, tantalum, or tungsten - metals used in a vast array of products - they must undertake a search designed to ascertain whether any of those materials originally came from the Democratic Republic of the Congo (DRC) or any of its neighboring countries. Unless the answer is clearly "no" the company must file a Conflict Minerals Report with the SEC and will likely have to conduct additional diligence, potentially including an independent private-sector audit.

In short, U.S. and foreign companies affected by the rule will be required to meet stringent new requirements in examining their supply chains. SEC-reporting manufacturing companies and other companies, including some retailers and many other companies that will be drawn into the regime to satisfy their customers' demands, must put in place a reliable system to find out if their products contain even minute quantities of these minerals.

A growing number of companies are discovering they are affected by the new rule and need to understand how to meet their obligations in time for a reporting period that begins January 1, 2013, with the first reports due in May 2014. The compliance costs of this program are expected to be very significant, and a broad cross-section of U.S. companies should be taking steps now to ensure compliance mechanisms are in place by the time the initial reporting period begins.

This webinar brings together experienced faculty on the conflict minerals rule, metals supply chains, SEC compliance, and the due diligence process from the law firm of Pepper Hamilton and the Freeh Group International Solutions, LLC, which have conducted numerous diligence and compliance programs and internal monitoring programs. The webinar covers who must comply, how to establish a sound supply chain diligence system, and pitfalls to avoid under this new regulatory regime.


Blake A. Coppotelli, Freeh Group International Solutions, advises public and private clients on public corruption, government, regulatory, and/or corporate investigations, financial and investigative due diligence, internal corporate controls and governance, and ethics policies

Robert A. Friedel, partner, Pepper Hamilton LLP, member, Corporate and Securities Practice Group, actively involved in federal securities compliance counseling

Jane C. Luxton, partner, Pepper Hamilton LLP, chair, Sustainability, Clean Tech, and Climate Change Team, author of numerous publications on conflict minerals with longstanding mining and metals experience

Richard J. Zack, partner, Pepper Hamilton LLP, member, White Collar Litigation & Investigations Practice Group, regularly conducts complex internal investigations for Fortune 500 corporations, educational institutions, and government entities

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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