In 2010, Congress passed the Dodd-Frank Act, which directs the Commission to issue rules requiring certain companies to disclose their use of conflict minerals if those minerals are “necessary to the functionality or production of a product” manufactured by those companies. Under the Act, those minerals include tantalum, tin, gold or tungsten.

Congress enacted Section 1502 of the Act because of concerns that the exploitation and trade of conflict minerals by armed groups is helping to finance conflict in the DRC region and is contributing to an emergency humanitarian crisis. Section 1502 of the Act amends the Securities and Exchange Act of 1934 to add Section 13(p).

The Rule

The final rule applies to a company that uses minerals including tantalum, tin, gold or tungsten if:

  • The company files reports with the SEC under the Exchange Act.
  • The minerals are “necessary to the functionality or production” of a product manufactured or contracted to be manufactured by the company.

The final rule requires a company to provide the disclosure on a new form to be filed with the SEC (Form SD).

Measuring the Efficacy of the Regulations

A 2014 Tulane University Law School study investigating the market impact of the conflict minerals rule reveals that each company that filed a Form SD (Special Disclosure Report) invested an average of approximately $546,000 worth of time and effort to comply with the law – largely consisting of in-house corporate time, external human resources, an IT evaluation and IT system expenses. Small issuers spent approximately 1/3rd as much as a large issuer counterpart (small issuer is less than $100 million in revenue).  In the aggregate, companies reportedly incurred a total of approximately $710 million to establish conflict minerals programs to furnish the required information by the law’s June 2, 2014 deadline.

As noted by the folks over at, companies that participated in the survey most frequently cited these reservations about the rule:

– The law renders affected companies less competitive due to the heavy cost burden
– It is unlikely the desired impact is being achieved in the Democratic Republic of the Congo
– The law is unfair in that it is trying to fight a war in the business world with only public companies
– The SEC is not intended as a regulator of social responsibility

Hat tip to The

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