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发帖数: 29846 | 1 Big U.S. Retailers Are Expected to Escape Dodd-Frank 'Conflict Mineral'
Disclosure Requirement .
By JESSICA HOLZER
WASHINGTON—Big retailers including Target Corp. TGT -1.08% and Wal-Mart
Stores Inc. WMT -0.38% may largely escape a costly new rule that requires U.
S.-listed companies to disclose whether their goods contain so-called
conflict minerals that are blamed for fueling violence in central Africa.
Retailers lobbied to be exempted from the requirement, which will affect
manufacturers of a range of products, including smartphones, light bulbs and
footwear.
The Securities and Exchange Commission had proposed an earlier version of
the rule that would have applied to retailers carrying products sold under
their own brand names, but which are typically produced by outside
contractors. On Wednesday, however, the SEC voted 3-2 to adopt a final rule
that would exempt companies that don't exert direct control over the
manufacture of such products.
The rule, which was mandated by the Dodd-Frank financial overhaul, have been
a source of friction between the SEC and companies ever since the law was
passed in 2010. Companies have said the requirement would be burdensome and
expensive.
Indeed, the SEC on Wednesday sharply raised its estimate of the rule's
financial impact, saying it would cost companies a total of $3 billion to $4
billion upfront, plus more than $200 million a year. The SEC initially had
said the cost of compliance would be just $71 million. It said it revised
its estimate based on comments from the business community and others.
The SEC estimates around 6,000 U.S. and foreign companies would have to
comply with the conflict-minerals rule, which covers products containing tin
, tantalum, tungsten and gold.
Companies that merely attached their brand or label to a generic product
made by another company aren't covered, the SEC said. But it added that if
their involvement with the product went beyond that point, they "would need
to consider all of the facts and circumstances" to determine if they were
governed by the rule.
The SEC also on Wednesday passed a similar disclosure rule focused on the
development of foreign oil fields, which was also mandated by the Dodd-Frank
law.
Industry lobbyists were optimistic the bulk of store-brand goods sold by
leading retailers wouldn't fall under the conflict-minerals requirement, but
they were waiting to read the full text of the rule.
"We are pleasantly surprised where [the agency] ended up," said Jonathan
Gold, National Retail Federation vice president. Mr. Gold declined to
elaborate before seeing the full text, which the SEC posted on its website
Wednesday evening.
SEC Chairman Mary Schapiro said Wednesday the conflict-minerals rule was
implemented in a "fair and balanced manner," and the SEC "incorporated many
changes from the proposal that are designed to address concerns about the
costs."
A spokeswoman for Target said the retailer is "committed to sourcing
products from business partners who engage in responsible mining practices"
and is "taking time to understand the impact of the new rule."
Best Buy Co., BBY +1.95% which also sells store-brand products, declined to
comment.
The four minerals covered by the rule are thought to be used to finance
armed groups in the Democratic Republic of Congo and the surrounding region.
Companies using any of these minerals are required to investigate whether
they were mined from the area. Those that believe they use minerals from the
region must file a report with the SEC saying what steps they took to
verify the minerals weren't taxed or controlled by rebel groups.
"We remain concerned about the challenge of complying with these new and
complex requirements," said Retail Industry Leaders Association Vice
President Stephanie Lester.
The companies don't have to file a so-called minerals report with the SEC if
their materials come from scrap or recycled sources. Companies that fail to
verify their sources of supply still can sell their products, but run some
reputational risk if their connections to problems in the region are
publicized.
Nonprofit groups wanted companies to take immediate steps to comply with the
rule, rather than take advantage of a two-year transition period during
which they could categorize certain products as "DRC conflict undeterminable
."
Corinna Gilfillan, head of the U.S. office of Global Witness, a human-rights
group, said she was disappointed the SEC approved a two-year phase-in
period for the rule, accusing the agency of caving to pressure from
businesses.
SEC records indicate that representatives of Best Buy, J.C. Penney Co., JCP
+0.66%Costco Wholesale Corp., COST -0.72% Lowe's Cos., Wal-Mart and Target
met with officials to air their concerns about the rule.
Costco declined to comment. J.C. Penney and Lowe's Cos. didn't respond to
requests for comment.
Republican SEC commissioners Troy Paredes and Dan Gallagher opposed the rule
, questioning whether it belonged in the securities laws and whether the
agency had determined the rule would do more harm than good.
The SEC rejected other demands from business groups, including an exemption
for companies using minimal amounts of minerals. The SEC said companies'
minerals reports would be subject to the same level of legal liability as
annual reports and other important SEC filings.
Also on Wednesday, the SEC voted 2-1 to adopt rules requiring companies to
report their payments to the U.S. and foreign governments for developing oil
and gas fields, another regulation that businesses say could cost them
billions of dollars.
The SEC rejected a plea from the industry for an exemption for companies
operating in places that forbid the disclosure of such payments.
The American Petroleum Institute, in a press release, said the rule would
hand U.S. oil companies' competitors a tactical advantage. |
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