Mandated Disclosure Of Conflict Minerals : Does It Work?

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Section 1502 Mandated Disclosure of Conflict Minerals: Does it work? In short form, Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act mandates disclosure of conflict minerals originated in the Democratic Republic of the Congo (DRC) to the Securities Exchange Commission (SEC) and due diligence in sourcing those conflict minerals. Conflict minerals include gold, tantalum, tin, and tungsten, which are used in many popular consumer products used and manufactured throughout the globe. The use of conflict minerals is a growing concern for consumers due to the fact that in the DRC where these minerals can be mined cheaply, an alarmingly high amount of human rights violations are committed by Congolese warlords and…show more content…
High implementation cost of Section 1502 has been a major concern of stakeholders, but initial compliance costs may have been miscalculated. In a 2015 article, McKay Harline of Northwestern University argues that "the SEC rule imposes significant economic and administrative burdens on reporting companies, suppliers, and manufacturers," claiming that the "determination as to the origin of the minerals... proves a truly 'Herculean ' task." Research regarding the cost implementation issue, including the Northwestern Journal article, oft-cites a 2011 Tulane University study, which was led by a first-year doctoral student. This study suggests an initial compliance cost of $7.93 billion USD. This estimate is relatively conservative as compared to others, such as the $16 billion compliance cost calculated by the National Association of Manufactures (NAM), an industry lobbyist. The SEC, like many other state agencies, uses a highly extensive form of cost-benefit analysis which quantifies each cost and benefit of their proposed rules. In its final ruling on conflict minerals, the SEC provides an initial cost estimate range of $3 to $4 million. However, the SEC did not develop its own model to reach this estimate. Rather, the Commission calculated this range based on its commentators ' estimates. This resulted in a calculated range that was largely
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