On April 29, 2014, Keith Higgins, director of the SEC Division of Corporation Finance, released a statement describing the SEC staff's expectations for company reporting under the conflict minerals rule in light of the recent Court of Appeals ruling upholding portions of the rule and striking down others. The guidance:

On April 14, 2014, the Court of Appeals for the District of Columbia Circuit ruled on a legal challenge brought by several business groups against the conflict minerals rule, Rule 13p-1 under the Exchange Act. The ruling held that the conflict minerals rule violates the First Amendment to the US Constitution to the extent it requires companies to disclose that their products have "not been found to be 'DRC conflict free.'" As adopted by the SEC, the rule requires this disclosure under certain circumstances. The Court of Appeals rejected several other arguments challenging the rule as arbitrary and capricious under the Administrative Procedure Act and Exchange Act. The Court of Appeals remanded the action to District Court for further proceedings consistent with the ruling. For more information on the holding, see Legal Update, Conflict Minerals Challenge: DC Circuit Strikes Disclosure Provision and Upholds Rest of Rule.

Director Higgins' statement indicates that the SEC staff expects companies to comply with the conflict minerals rule, including by filing Form SD and a Conflict Minerals Report (CMR), as applicable, by June 2, 2014. These filings should address the portions of rule upheld by the Court of Appeals. Therefore:

The guidance states that the staff is considering whether to provide additional guidance on conflict minerals reporting.

Also on April 29, 2014, the business groups filed with the SEC a motion to stay the implementation of the conflict minerals rule and a brief in support of the motion. The motion requests that the SEC act on the motion by May 1, 2014 and indicates that the business groups intend to seek a stay from a court if the stay is denied by the SEC.

Director Higgins' statement follows two statements by SEC Commissioners this week on the conflict minerals rule. These statements included Congressional testimony by SEC Chair White indicating conflict minerals reporting would proceed as scheduled, and a joint statement by Commissioners Daniel M. Gallagher and Michael S. Piwowar. The joint statement expressed the view that the entire conflict minerals rule should be stayed pending proceedings on remand to the District Court. For a further discussion of these statements, see Legal Update, SEC Chair White: Conflict Minerals Rule Implementation to Go Forward.

For more information on the conflict minerals rule, see Practice Note, Conflict Minerals Diligence.

Update: On May 2, 2014, the SEC issued an order that partially stays the conflict minerals rule. Consistent with Director Higgins' April 29, 2014 guidance, the order only stays the requirements of the conflict minerals rule held to violate the First Amendment. The order also denies the business groups' motion to stay the conflict minerals rule in its entirety.

Update: On May 5, 2014, the business groups filed an emergency motion for a stay of the conflict minerals rule with the Court of Appeals for the DC Circuit. The motion argues that, in light of the court's April 14, 2014 holding, the court should stay the conflict minerals rule pending further proceedings on remand to District Court. The motion argues that: