Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

The SEC has filed its brief in the conflict minerals rehearing.  Amnesty International also filed its brief as intervenor and Free Speech for People filed an amicus brief.

To recap, when the court held the conflict minerals rule was compelled speech that violated the First Amendment, it did so on the basis that limited scrutiny under Zauderer was not appropriate because that was reserved for situations involving the deception of consumers.  Subsequently, an en banc court found in American Meat Inst. that other government interests outside of consumer deception could support the application of Zauderer.  For Zauderer to apply the commercial disclosure must be of purely factual and uncontroversial information.

To further frame the issue, is a compelled statement that products have not been found to be “DRC conflict free” purely factual and uncontroversial information?

According to the SEC, the key question is whether the disclosure at issue is consistent with the First Amendment interest in facilitating the free flow of factual information or, rather, trenches upon First Amendment principles by requiring a speaker to convey or endorse an opinion.  The mere fact that the speaker objects to making a factual disclosure does not make it controversial, at least in the SEC’s view.

And from there it is easy to see where this will go.  The SEC maintains the disclosure is one of “literal fact” about whether an issuer has found its products to meet a defined standard.  It merely states whether a particular issuer’s products have been found to meet the statutory standard.

The SEC also notes NAM’s view that description required by the conflict minerals rule “reflects a government viewpoint that the mineral trade bears responsibility for causing the DRC conflict” and that the definition of “DRC conflict free” is “pregnant with political and ideological conclusions and connotations.”

Maybe the most clever point was made by Free Speech for People.  It notes nothing in the statute or the rule requires any speaker to use any variant of the term “DRC conflict free.”  You can comply with Form SD with a statement as simple as “the following products are required to be disclosed pursuant to 15 U.S.C. § 78m(p)(1)(A)(ii) and its implementing rule” followed by a description of the products—such as “Model XYZ handheld cameras manufactured between Dates A and B.”


Stinson Leonard Street LLP provides sophisticated transactional and litigation legal services to clients ranging from individuals and privately held enterprises to national and international public companies. As one of the 75 largest firms in the U.S., Stinson Leonard Street has more than 520 attorneys and offices in 14 cities, including Minneapolis, Mankato and St. Cloud, Minn.; Kansas City, St. Louis and Jefferson City, Mo.; Phoenix, Ariz.; Denver, Colo.; Washington, D.C.; Decatur, Ill.; Wichita and Overland Park, Kan.; Omaha, Neb.; and Bismarck, N.D.

The views expressed herein are the views of the blogger and not those of Stinson Leonard Street or any client.