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Court finds SEC’s conflict minerals rule violates First Amendment

  • SEC (US Securities and Exchange Commission) Image

Apr 15, 2014

Yesterday, the U.S. Court of Appeals for the District of Columbia Circuit held that parts of the SEC’s rule on conflict minerals and of Section 1502 of the Dodd-Frank Act Wall Street Reform and Consumer Protection Act (the “statute”) violate the First Amendment of the U.S. Constitution to the extent that they require “regulated entities to report to the Commission and to state on their website that any of their products have ‘not been found to be “DRC conflict free.” ’ ”

The court stated that the “requirement that an issuer use the particular descriptor ‘not been found to be "DRC conflict free"’ may arise as a result of the Commission’s discretionary choices, and not as a result of the statute itself. We only hold that the statute violates the First Amendment to the extent that it imposes that description requirement. If the description is purely a result of the Commission’s rule, then our First Amendment holding leaves the statute itself unaffected.”

For more information, see the related Deloitte Accounting Journal entry and the court’s opinion.  

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