Conflict Minerals Q&A: SEC Enforcement, China, Scrap, and Supplier Views

This Spend Matters PRO series is based on commentary and opinions expressed by the following industry experts at the MetalMiner/Spend Matters Conflict Minerals EDGE event: Jennifer Diggins (Nucor), Jeff Friedman (Kloeckner Metals), Lawrence Heim (The Elm Consulting Group), Rose of Sharon DeVos (Stainless Sales Corporation), Michael Pfeifer (Industrial Metallurgists LLC), Michael Loch (Motorola Solutions), Michael Littenberg (Schulte, Roth & Zabel), Chris Grove (Commerce Resources), Tyler Showalter (Buffalo Tungsten), Michael Loch (Motorola Solutions) and Dan Kendall (ABC Metals).

Is the SEC prepared to enforce conflict minerals compliance?

The SEC did not get approval to enforce conflict minerals (headcount wise) despite the fact they are tasked with enforcement. They asked for more than ten FTEs to assist with enforcement and got none. In other words, this is an unfunded mandate.

As it stands right now, there is no purely dedicated enforcement staff for conflict minerals within the SEC. But to be fair to the SEC, they did not want this, and weren’t given a choice by Congress. Congress pushed the requirement – and this is not their area of expertise.

As a result, the SEC isn’t going to look at regulation closely for a few years except for bad actors. If you’re acting in good faith as a company, I don’t think the SEC is going to come after you any time soon. The SEC looks for improvements in disclosures and processes – they don’t look to hammer companies acting in good faith [especially given their headcount constraints in this case]. The SEC may follow-up on whistle blowers as they do with FCPA enforcement.

The rest of this PRO research brief can be found on Spend Matters PRO. If you’d like to become a Spend Matters PRO member, please subscribe. If you’re not ready to subscribe or wonder why you should, we’ve answered some FAQs here or you can email a Spend Matters team member directly. If you’re not into paying for content, we get that too. Thanks for reading!

Voices (2)

  1. Jason Busch:

    Conflict Minerals EDGE … an event that took place earlier this week in Chicago with over a dozen experts (including legal and legislative experts) participating. I would recommend reading the full brief and our further research on the topic on Spend Matters PRO (you can sign up for a free trial) to understand what companies should be doing to avoid being bad actors in the initial stages of compliance.

  2. JWPUG:

    What makes you think the SEC won’t enforce this? Do you have people on the inside? Where do you get your information?

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