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Pepper Hamilton LLP’s Conflict Minerals Group combines lawyers from the firm’s substantive practice areas to work together on behalf of clients affected by the U.S. Securities and Exchange Commission (SEC)’s conflict minerals rule, including manufacturers, suppliers, distributors, retailers and industry trade associations.
The SEC’s conflict minerals reporting rule requires public companies that are engaged in manufacturing to file annual reports describing the source of any tin, tungsten, tantalum and gold (3TGs) that is contained in their products. The rule applies directly to all U.S. and foreign companies engaged in manufacturing that file SEC reports, but it also indirectly affects a far larger number of companies that are suppliers to SEC filers.
The conflict minerals rule, as written, necessitates complex supply chain due diligence and, in many cases, independent audits, certifications and imposed SEC reporting obligations. Companies that use conflict minerals from specified countries in Central Africa in their manufacturing process have the heaviest compliance burden pursuant to the rule. Due to a 2015 federal court decision holding that certain provisions of the conflict minerals rule violated the First Amendment of the U.S. Constitution, the SEC has suspended application of the portions of the rule mandating detailed supply chain due diligence and a third party audit of a conflict minerals report. Nevertheless, all companies subject to the rules still need to undergo some degree of inquiry into their supply chains in order to be able to reach a reliable conclusion as to whether they have any reportable conflict minerals obligations.
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, SEC compliance, the Foreign Corrupt Practices Act and investigations experience.
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. Our group advises clients on the following: