June 9, 2014
Conflict Minerals: Reactions to the First Reports
Here is an excerpt from this Cooley news brief by Cydney Posner:
As reported in this WSJ article, nearly 1,300 companies filed Forms SD to report on conflict minerals by the June 2 deadline. The result? Inconclusive. While a number of companies acknowledged their suppliers may have sourced minerals from the DRC or adjoining countries, a “majority of companies whose filings were reviewed by The Wall Street Journal… said they haven’t figured out if their products, ranging from electronics to jewelry, are in the clear. Only a handful were confident their supplies were free of conflict metals….” Companies contended that the sources were difficult to trace, that they did not receive questionnaires from suppliers or received incomplete, inaccurate or unreliable responses or that “the complexity of their manufacturing processes made it impossible to give a definitive answer.”
A conflict minerals consultant observed that the “‘credibility and the certainty of the data, through the supply chain, doesn’t really exist completely. Because it is the first time anybody has ever done this, there is a question about the quality of the data.'” The article notes that the “SEC estimated conflict-mineral reports would cost companies up to $4 billion in the first year, and drop to between $200 million and $600 million in later years. Companies were projected to take about 480 hours, on average, to complete a report, compared with about 2,000 hours for a corporate annual report.” It will be interesting to see what the real numbers were.
Proposed Regulation A+: Comment Letter from 20 Members of Congress Opposing Pre-Emption
A few days ago, 20 members of Congress submitted this comment letter opposing pre-emption in the context of proposed Regulation A+. For some time, NASAA has been making the argument that the pre-emption aspects of proposed Regulation A+ are inconsistent with legislative intent. In addition, SEC Commissioner Stein is opposed to pre-emption – and Commissioner Aguilar has said that he has asked the SEC’s General Counsel to provide guidance on whether pre-emption was permitted. Here are all the comments so far on this proposal. Thanks to David Pankey of McGuireWoods for the heads up!
Meanwhile, here are the comments on the SEC’s crowdfunding proposal – including this one recently filed by the ABA’s Business Law Section…
Opposing Climate Change: Environmental Groups Warn Directors and Executives of Possible Personal Liability
Here’s news from Ning Chiu in this Davis Polk blog:
Greenpeace International, WWF International and the Center for International Environmental Law sent letters to executives and directors of 32 major oil, gas and energy companies, warning them that they may ultimately face personal liability related to climate change issues.
According to the NGOs, the targeted companies are “working to defeat action on climate change and clean energy by funding climate denial and disseminating false or misleading information on climate risks.” Beyond this general yet inflammatory allegation, there are no specific examples or references cited other than a list of news stories and other publications about corporate influence and “lobbying” activities. The group claims that these companies face increasing risks of climate-related litigation arising from insufficient disclosures or as a result of major corporate losses, expenses or penalties. Derivative suits may follow with allegations of officers and directors’ mismanagement and ultimately create an evolving standard of fiduciary duty in the context of climate change. As a result, they warn that D&O insurers may not provide coverage for these kinds of lawsuits. The letter was also sent to 45 D&O insurers.
Responses to a list of questions, which will be made publicly available, are requested in four weeks. The questions include whether officers and directors believe that they would be indemnified under the company’s D&O policy if accused of having “misled” consumers and investors or engaged in “disinformation” or campaigns to “obstruct, suppress or discredit” scientific information.
– Broc Romanek