WASHINGTON (AP) — A federal appeals court has overturned a disclosure requirement that public companies must post information about their use of minerals from Congo, where militias linked to atrocities have profited from mining minerals used in electronics, jewelry and other goods.
The appeals court says the requirement violates the free speech rights of companies that must inform the Securities and Exchange Commission and publicize on their websites that any of their products have not been found to be free of mineral conflicts.
While overturning the disclosure requirement, the court rejected industry arguments that the SEC must conduct rigorous, quantitative economic analysis on the costs and the benefits of the conflict minerals rule.
An agency is not required to measure the immeasurable, and need not conduct a rigorous, quantitative economic analysis unless the law explicitly directs it to do so, wrote appellate judge A. Raymond Randolph.
The conflict minerals provision is part of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Dennis Kelleher, president and CEO of Better Markets, a non-profit organization, said that provision in the appeals court decision takes away one of the financial industry's constant arguments — that reform costs too much money.
Rejecting the industry arguments is profoundly important for financial reform, because it will enable the SEC to actually pass many other financial reform rules, said Kelleher.
In the portion of its ruling overturning the disclosure requirement, Randolph said the label about not being free of mineral conflict requires a company to tell consumers that products are ethically tainted, even if they only indirectly finance armed groups.