CARLSBAD, Calif., April 17, 2014 /PRNewswire/ -- The recent ruling by the Court of Appeals has no impact on whether or not issuers are obligated to conduct due diligence, a reasonable country of origin inquiry, or file a Form SD or CMR. Ultimately, the ruling was over semantics involved in labeling products as "DRC conflict free" in reports filed with the SEC and on company web sites. It is still unclear what the SEC will require products containing conflict minerals sourced from the DRC to be labeled.
On Monday, the Court of Appeals for the D.C. Circuit held that Section 13(p)(1) of the Exchange Act, and Rule 13p-1 thereunder, violate the First Amendment to the extent that the statute and the Rule require companies to report to the SEC and state on their websites that any of their products have "not been found to be 'DRC Conflict Free.'"
Dr. Jennifer Kraus, Chief Scientific Officer of Source Intelligence, added clarity saying, "Issuers still need to address conflict minerals just as they had before the recent decision over public disclosure. They need to conduct an RCOI, exercise due diligence, if required, and then file a form SD and CMR, if evidence is found that conflict minerals may have originated from the DRC. Source Intelligence is finding that companies have not let this recent decision impact their course of action because they recognize public opinion is overwhelmingly in favor of transparency in the responsible production of goods."
Recently, Source Intelligence has acquired a growing number of conflict minerals service contracts from companies not subject to the Dodd-Frank Rule. These companies recognize that whether it is the SEC or consumer activists who carry the message about which corporations are responsible or irresponsible is immaterial. The message will be heard, and it's worth the effort to embrace transparency in the supply chain to ensure ethical sourcing.
Section 1502 of the Dodd-Frank Act mandates transparency into corporate practices to reduce funding for armed groups involved in human rights violations in the Democratic Republic of the Congo and surrounding countries.
To learn more about conflict minerals compliance programs, click here.
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SOURCE Source Intelligence