A federal securities rule that requires companies to publicly declare whether certain minerals used in products are “conflict free” violates the First Amendment, a divided federal appeals court in Washington ruled on April 14. The U.S. Securities and Exchange Commission adopted the rule under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit upheld in large part the substance of the rule, which requires companies to disclose the “source and chain of custody of its conflict minerals.” The National Association of Manufacturers, represented by Peter Keisler, chairman of Sidley Austin’s appellate practice, challenged the rule. The appeals court was divided over the requirement that covered companies must on their websites and in SEC reports declare whether a product is “conflict-free.” A product is “conflict-free,” the appeals court said, “if its necessary conflict minerals did not ‘directly or indirectly finance or benefit armed groups’ in the covered countries, which include the Democratic Republic of the Congo. The minerals at issue include gold, tin and tungsten.
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