Here’s a classic from John Jenkins of Calfee Halter: So I’m sitting here in my office on a sunny afternoon on the Thursday before Labor Day, and I get the bright idea to tackle the SEC’s release adopting the final version of the Conflict Mineral disclosure rules required by Dodd-Frank.
This was not the best idea I’ve had this week.
We’ve all made our way through massive SEC releases before (the Aircraft Carrier, the Executive Comp rules, and Securities Act Reform all come to mind), but this 368 page juggernaut may well be the Citizen Kane of bureaucratic prose. I tried to slog through it, but I only got to page 25 or so before the description of the labyrinthine due diligence and reporting requirements mandated by the new rules simply overwhelmed me:
As an exception to this requirement, however, an issuer that must conduct due diligence because, based on its reasonable country of origin inquiry, it has reason to believe that its necessary conflict minerals may have originated in the Covered Countries and may not have come from recycled or scrap sources is not required to submit a Conflict Minerals Report if, during the exercise of its due diligence, it determines that its conflict minerals did not, in fact, originate in the Covered Countries, or it determines that its conflict minerals did, in fact, come from recycled or scrap sources. Such an issuer is still required to submit a specialized disclosure report disclosing its determination and briefly describing its inquiry and its due diligence efforts and the results of that inquiry and due diligence efforts, which should demonstrate why the issuer believes that the conflict minerals did not originate in the Covered Countries or that they did come from recycled or scrap sources. On the other hand, if, based on its reasonable country of origin inquiry, an issuer has no reason to believe that its conflict minerals may have originated in the Covered Countries, or, based on its reasonable country of origin inquiry, an issuer reasonably believes that its conflict minerals are from recycled or scrap sources, the issuer is not required to move to step three.
As I read this paragraph again and again in an effort to comprehend it, a strange thought occurred to me, so I took a break and Googled “Monty Python’s Meaning of Life script.” Sure enough, there was a copy online, and I quickly scrolled down to the scene where John Cleese plays a headmaster addressing a class full of British public schoolboys. I was right — the text of the Conflict Minerals Release bears a striking resemblance to Cleese’s ramblings in the film:
Headmaster: All right, settle down, settle down. Now before I begin the lesson will those of you who are playing in the match this afternoon move your clothes down on to the lower peg immediately after lunch before you write your letter home, if you’re not getting your hair cut, unless you’ve got a younger brother who is going out this weekend as the guest of another boy, in which case collect his note before lunch, put it in your letter after you’ve had your hair cut, and make sure he moves your clothes down onto the lower peg for you. Now…
Headmaster: Yes, Wymer?
Wymer: My younger brother’s going out with Dibble this weekend, sir, but I’m not having my hair cut today sir, so do I move my clothes down or…
Headmaster: I do wish you’d listen, Wymer, it’s perfectly simple. If you’re not getting your hair cut, you don’t have to move your brother’s clothes down to the lower peg, you simply collect his note before lunch after you’ve done your scripture prep when you’ve written your letter home before rest, move your own clothes on to the lower peg, greet the visitors, and report to Mr Viney that you’ve had your chit signed. . .
The resemblance between the two passages leads me to one of three conclusions. First, the staff members involved in writing this release are big Monty Python fans; second, President Obama appointed John Cleese to the Commission when I wasn’t looking; or third, life really is as absurd as the Monty Python guys make it out to be.
My vote goes to the third alternative.
Here’s an interesting viewpoint on the conflict minerals rulemaking, courtesy of Marty Rosenbaum’s “Conflict Minerals Rules May Foster Corporate Social Responsibility.” And we continue to post oodles of memos in our “Conflict Minerals” Practice Area.
Reporting Equity Awards: Twists to Otherwise Durable Standard
Learn about Corp Fin’s new approach to reporting equity awards in the Summary Compensation Table and the Director Compensation Table when it comes to complex equity award structures in the Summer issue of our Compensation Standards newsletter. If you’re not a member of CompensationStandards.com, get this issue for free when you try a no-risk trial for 2013.
And learn more about this – and many more topics over 13 panels – during our upcoming “7th Annual Proxy Disclosure Conference,” which is only five weeks away. We are happy to report that the New Orleans conference hotel made it through Hurricane Issac just fine. But the city needs your support since tourism is the lifeblood of the city. If you can’t make it, you can always catch the conference by video. Register Now!
Webcast: “Hot Topics for Smaller Company Legal Depts”
Tune in tomorrow for the webcast – “Hot Topics for Smaller Company Legal Depts” – that will give you tips on how to beat a tight budget, etc. featuring Barbara Blackford, formerly of Superior Essex; Carrie Darling of Encore Capital Group; Bret DiMarco of Coherent; Stacey Geer of Primerica; Isobel Jone of Peet’s Coffee & Tea and David Scileppi of Gunster.
Note that we just added SEC Trading and Markets Deputy Director Jim Burns for today’s webcast – “JOBS Act Update: Where Are We Now” – that will analyze evolving market practices and the latest from the SEC including last week’s proposal to eliminate the ban on general solicitation in Rule 506 and 144A offerings. The program also features SEC Corp Fin Deputy Director Lona Nallengara, Wilson Sonsini’s Steve Bochner, Latham & Watkin’s Joel Trotter, Davis Polk’s Michael Kaplan and Dave Lynn of Morrison & Foerster and TheCorporateCounsel.net.
– Broc Romanek