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You Win Some, You Lose Some - the SEC and Business and Human Rights Issues

SEC

So the SEC has had an eventful July for business and human rights related issues.

First, on July 2nd, the Commission was dealt a blow when Judge John Bates, of the US District Court for the District of Columbia, struck down the SEC’s rule requiring corporate disclosure of “payments made to foreign governments in connection with the commercial development of oil, natural gas, or minerals.” The rule was promulgated under Congressional discretion to prevent the Resource Curse that befalls many developing countries. The Court ruled that the Commission incorrectly found that the requisite Congressional statute was unambiguous regarding what the SEC was required to do, and as a result, vacated the rule and remanded to the SEC for further proceedings.

Nonetheless, on July 23rd, the SEC pulled out (what one commentator called ) called a “rare victory” in federal court, when Judge Robert Wilkins (also of the US District Court for DC) held that the SECcould require companies to disclose whether their products are manufactured with “conflict minerals” from the Democratic Republic of Congo, a country with an abysmal human rights record that is specifically linked to the mining of gold, tin, tantalum and tungsten.

What’s interesting is that the parties made similar claims in both cases. In each case, plaintiffs argued that the SEC’s rules were arbitrary and capricious and violated corporate rights to free speech (a position no doubt augmented in recent years by the US Supreme Court’s decision in theCitizens United case). The arguments worked in one and not in the other (although, in fairness, Judge Bates didn’t address the free speech issue because he’d already vacated the rule on other grounds). The disparate rulings (and attendant rationales) make for interesting reading.

A copy of the July 2nd case, API v. Securities and Exchange Commission can be found here.

A copy of the Court’s July 23rd ruling, National Association of Manufacturers et al., v. Securities and Exchange Commission can be found here.

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