A third issuer has submitted their Form SD and Conflict Minerals Report. As with the previous two filings, this one misses the mark. And unfortunately since they selected to file so early, they stand out and will be put under the microscope by many.
For starters, as with the first filing, this one is very likely too brief.
It appears that the issuer should have conducted an IPSA due to its claim of being “DRC Conflict Free”*. However, a careful reading of the very short CMR gives the impression that the claim is actually based on RCOI results. If that is indeed the case, then the company is not technically “DRC Conflict Free” and a CMR and IPSA are not required. But most issuers are not confident enough in their RCOI data to stop there.
If, on the other hand, the issuer did undertake due diligence measures and appropriately came to this conclusion, then the lack of an IPSA is inconsistent with the SEC requirements.
We wonder what – if any – advantage there is to filing in advance of the deadline given the amount of ambiguity and interpretation that is inherent in the requirements. Our general view is that early filings invite significant scrutiny that may result in problems rather than a perceived competitive advantage.
* Yes, we know that the phrase itself is no longer required to be used in the disclosures. But we will not belabor that point since that is widely known by now.