WASHINGTON – The US Securities and Exchange Commission (SEC) has spent about $2.75-million to write, implement and defend itself against legal challenges to its "conflict mineral rules," SEC chairperson Mary Jo White revealed this month.
The cost estimates, laid out in a March 16 letter to top lawmakers on the House of Representatives financial services panel, are likely to irk Republicans who have lambasted the rule as being a waste of time and a special interest rule for liberal-leaning human rights groups.
In the letter, seen by Reuters on Tuesday, White said staff have spent about 17 000 hours since July 2010 writing the rule at a cost of about $2.1-million.
Another $520 000 and 4 000 hours have been spent defending the rule from an ongoing legal challenge and another $128 000 updating its systems for companies to begin submitting conflict mineral disclosure reports.
When asked about the costs during a House Financial Services hearing on Tuesday, White told lawmakers the rule is a "congressional mandate" that pre-dated her tenure.
"It is my obligation to carry it out," she added.
The conflict minerals rule, a requirement of the 2010 Dodd-Frank Wall Street reform law, requires publicly traded manufacturers to disclose to investors whether any tantalum, tin, gold or tungsten used in their products may have originated from the conflict-ridden Democratic Republic of Congo.
The bulk of the rule is already in effect, but part of it remains locked in litigation after three leading business trade groups challenged it on the grounds it violated the free speech of companies.
Last spring, a US appeals court upheld most of the rule, but struck down a section which required companies to tell investors if some of their products were either conflict free or not.
The SEC has since asked the appeals court for a re-hearing on the ruling, and briefs have since been submitted for consideration.
In the meantime, companies have been submitting the rest of the required disclosures under the rule, which include telling investors about the inquires they undertook to determine the origin of the minerals.
The cost estimate on the conflict minerals rule was conducted by the SEC's staff at the request of House Financial Services chairperson Jeb Hensarling.