SEC Denies Petition for Stay of Entire Conflict Minerals Rule; Stays Only Portion of Rule

By Cydney Posner

Today, in response to the request by the National Association of Manufacturers, Chamber of Commerce and the Business Roundtable for a stay of the conflict minerals rule, the SEC issued an order denying the petition for a stay of the entire rule and staying only those portions of the rule that the D.C. Circuit had ruled unconstitutional as a violation of the First Amendment. The order rests principally on the statement in the court's opinion that "there was no ‘First Amendment objection to any other aspect of the conflict minerals report or required disclosures.'" In the order, the SEC stated that, in "light of the Court of Appeal's decision, the Commission finds that it is consistent with what justice requires to stay the effective date for compliance with those portions of Rule 13p-1 and Form SD that would require the statements by issuers that the Court of Appeals held would violate the First Amendment. Among other things, a stay of those portions of the rule avoids the risk of First Amendment harm pending further proceedings. Moreover, limiting the stay to those portions of the rule requiring the disclosures that the Court of Appeals held would impinge on issuers' First Amendment rights furthers the public's interest in having issuers comply with the remainder of the rule, which was mandated by Congress in Section 1502 and upheld by the Court of Appeals." The order refers companies to the Corp Fin statement of April 29 for more detailed guidance. As a result, it appears that the petitioners will be headed back to court to seek a stay of the entire rule.

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