SEC Conflict Minerals Rule Violates Free-Speech Rights

A U.S. Securities and Exchange Commission rule requiring companies to disclose whether any “conflict minerals” are used in their products violates the free-speech rights of manufacturers, an appeals court said.

The rule was part of the 2010 Dodd-Frank Act overhauling regulations of securities markets and applied to certain minerals, including gold, tin, tungsten and tantalum, mined in Democratic Republic of the Congo and neighboring countries. It was intended to help ensure that use of the minerals didn’t benefit armed groups responsible for violence in the region.

The requirement to disclose the information will cost thousands of companies as much as $4 billion to put in effect, according to the SEC. It goes beyond disclosure that is merely factual and non-ideological, U.S. Circuit Judge A. Raymond Randolph, wrote for the majority of a three-judge panel at the U.S. Court of Appeals in Washington.

“It requires an issuer to tell consumers that its products are ethically tainted,” and leaves a company unable to use its free-speech right to dispute that assessment by remaining silent, Randolph wrote. “By compelling an issuer to confess blood on its hands, the statute interferes with that exercise of the freedom of speech under the First Amendment.”

Judith Burns, a spokeswoman for the SEC said the agency is studying the ruling.

The case is National Association of Manufacturers v. U.S. Securities and Exchange Commission, 13-5252, U.S. Court of Appeals, District of Columbia (Washington).

With assistance from Dave Michaels in Washington.

To contact the reporter on this story: Andrew Zajac in Washington at

To contact the editors responsible for this story: Michael Hytha at Joe Schneider, Peter Blumberg

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