Acting SEC Chair Skeptical About Conflict Minerals Rule's Effectiveness
Acting Chairman of the Securities and Exchange Commission Mark Uyeda recently suggested that the U.S. government should reconsider the effectiveness of reporting requirements under the SEC's conflict minerals rule as a tool to safeguard against human rights abuses in Africa.
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"It is far past time to re-evaluate such obligations with a view to determining whether such disclosure requirements should remain in effect. Key provisions of the underlying statute provide that it terminates on the date on which the President makes certain determinations. Congress can also repeal this statutory provision," Uyeda said at the SEC Speaks conference, according to posted prepared remarks. "In any event, the SEC should cease using financial disclosure regulations to bring about human rights changes in Africa, to the extent permitted by law."
Uyeda pointed to "significant compliance costs" that the rule has levied on companies "without clear corresponding benefits." By discouraging companies from sourcing minerals in places such as Congo, the policy has acted as a de facto boycott on such mineral purchases, he said.
"This result is unfortunate because tin, tungsten, and tantalum have each been classified by the U.S. Geological Survey on a list of mineral commodities critical to the U.S. economy and our national security," Uyeda said.
Law firm Ropes and Gray said in a recent note that Uyeda's remarks could translate into a "swan song" for the conflict minerals rule, as the rule has been controversial since it was first adopted in 2012.
"At the beginning of Trump 1.0, a draft of a Presidential Memorandum suspending the Conflict Minerals Rule was circulating, but it was never signed. Given the Trump 2.0 focus on raw materials security, as well as its goal to cut regulation, perhaps that Memorandum will be taken out of the drawer," attorneys with the law firm said.