You Better Watch Your Language…

As companies draft their CY2014 Conflict Minerals Reports (CMRs), a reasonable starting point is last year’s document.  And since the SEC’s April 29, 2014 stay of the mandate to use the wording “DRC Conflict Undeterminable”, “DRC Conflict Free” and “not having been found to be DRC Conflict Free” remains in effect, filers may also want to replicate the product determination language used for the CY2013 submittals.

While that may be tempting (and easy), we caution against doing so without a careful review.  Recall CorpFin Director Keith Higgins’ comments about the CY2013 filings:

Obviously, if you say your [product] is conflict-free, you have to provide an independent private sector audit, so nudging up close to that with some implied statement is probably not a good idea.

We have seen this in a few draft CY2014 CMRs, but it wasn’t done intentionally to imply a “DRC Conflict Free” determination.  Rather, the language was simply rather general and unintentionally conveyed a meaning noted by Higgins.  We actually see his point in some of the wording we’ve read.

So follow your mother’s advice – watch what you say.

As a post script, during our review of the CY2013 filings, we did find one issuer who claimed products as DRC Conflict Free without additional “undeterminable” products, and did not file an IPSA.  Another cautionary tale about the importance of making sure the CMR is thoroughly reviewed…

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