The Republican now leading the U.S. Securities and Exchange Commission has called the conflict mineral disclosure rule “misguided” and directed staff to reconsider how companies should comply with it.
The rule, mandated by the Dodd-Frank financial reforms, was intended to help determine whether the supply chains of public manufacturing companies contain even trace amounts of minerals linked to violence in Africa.
The SEC modified its guidance on compliance after a federal appeals court in 2014 ruled part of the rule was unconstitutional. On Tuesday, Acting Chairman Michael Piwowar announced he had directed staff to consider “whether the 2014 guidance is still appropriate and whether any additional relief is appropriate in the interim.”
“While visiting Africa last year, I heard first-hand from the people affected by this misguided rule,” he said in a statement, claiming it had caused “a de facto boycott of minerals from portions of Africa” and forced legitimate mine operators out of business because of the onerous costs of compliance.
“It is also unclear that the rule has in fact resulted in any reduction in the power and control of armed gangs or eased the human suffering of many innocent men, women, and children in the Congo and surrounding areas,” Piwowar added.
As Reuters reports, the conflict minerals regulation is “one of several SEC disclosure rules required by the 2010 Dodd-Frank law that Republicans and business groups have long sought to repeal, saying they force companies to furnish politically charged information that is irrelevant to making investment decisions.”
The oil industry has been a particularly vocal critic, complaining that the rule would put them at a competitive disadvantage to foreign firms and be unduly expensive.
Reuters said the SEC staff could issue interpretive guidance to scale back the rule’s requirements or, in a more aggressive move, choose not to enforce it.
According to research by Tulane University, companies shelled out roughly $709 million and six million staff hours in 2014 to comply with the rule.