Haynes and Boone's Newsroom

George Wang in the Wall Street Journal: SEC's 'Conflict Minerals' Rules Open Companies to Activists
09/19/2012

New rules issued by the Securities and Exchange Commission that require U.S.-listed companies to disclose whether their products contain minerals blamed for fueling violence in central Africa could open companies up to challenges from activist shareholders.

These "conflict-minerals" rules, which were mandated by the 2010 Dodd-Frank financial overhaul, have already irked companies for the cost of looking into often-complex supply chains and in some cases then switching suppliers.

According to analysts and attorneys, if companies don't fully comply with the rules they could also face significant costs on the back end at the hands of activist shareholders looking to push through a social agenda...

Under the new rules, companies won't know initially whether their efforts at supply chain vetting have been sufficient. George Wang, a partner with Haynes and Boone LLP, said the SEC in its rules decided not to specify the "reasonable" steps that companies need to take to verify the country origins of supplies.

Excerpted from the Wall Street Journal, September 20, 2012. To view full article, click here (subscription required).