Conflict Minerals

Pepper Hamilton LLP’s Conflict Minerals Group combines lawyers from the firm’s substantive practice areas and members of its investigation counseling services group to work together on behalf of clients affected by the U.S. Securities and Exchange Commission (SEC)’s recent conflict minerals rule, including manufacturers, suppliers, distributors, retailers, and industry trade associations.

In late summer 2012, the SEC issued a final rule requiring new, elaborate and costly reporting focused on “conflict minerals,” also known as the “3TGs” (tin, tungsten, tantalum, and gold). These SEC requirements necessitate complex supply chain due diligence and, in many cases, independent audits and certification, and impose SEC reporting obligations. Companies that use “conflict minerals” from countries in Central Africa in their manufacturing process have the heaviest compliance burden, but even companies that do not will need to undergo some degree of inquiry into their supply chains in order to be able to reach a reliable conclusion that they have no reportable conflict minerals obligations. The rule applies directly to all U.S. and foreign companies that file SEC reports, but it also indirectly affects a far larger number of companies that are suppliers to SEC filers.

Pepper Hamilton assists companies with the legal and investigative aspects of the reporting requirements. Our team includes lawyers with backgrounds in conflict minerals and supply chains, mining and minerals experience, SEC compliance, the Foreign Corrupt Practices Act, and investigations.

Complying with the rule is no easy task. Sophisticated monitoring systems and due diligence efforts will take time to implement and manage. Many “gray areas” exist. Below is an abbreviated list of services our group provides:

  • counsel regarding the rule’s applicability
  • counsel regarding consequences of late filing or non-filing of Form SD, etc.
  • preparation of Form SD and Conflict Minerals Reports
  • advice with respect to determinations in “gray areas”
  • identifying existing industry-developed conflict minerals compliance programs, and, if necessary, facilitating cooperative industry efforts aimed at developing chain of custody information
  • assistance with supply chain leverage issues
  • assistance with formulation of conflict minerals policy statements and objectives
  • assistance with the creation and implementation of due diligence policies, programs and ongoing initiatives (internal support structure, supply chain assessments, supply chain mapping, risk response strategies and initiatives, reporting and tracking systems, supply chain background screening, internal training)
  • conducting internal and external investigations on any claim made through the grievance mechanism
  • conducting gap reviews, benchmarking, and/or compliance assessments on internal and external due diligence policies, programs, and initiatives
  • advice on relationships between the conflict minerals program and implications under the Foreign Corrupt Practices Act, UK Anti-Bribery LAW, and other legal regimes.