79–006 

115TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 115–570 

TO AMEND THE SECURITIES EXCHANGE ACT OF 1934 TO REPEAL CERTAIN 

DISCLOSURE REQUIREMENTS RELATED TO CONFLICT MINERALS, AND 

FOR OTHER PURPOSES 

FEBRUARY 20, 2018.—Committed to the Committee of the Whole House on the State 

of the Union and ordered to be printed 

Mr. HENSARLING, from the Committee on Financial Services, 

submitted the following 

R E P O R T 

together with 

MINORITY VIEWS 

[To accompany H.R. 4248] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Financial Services, to whom was referred the 

bill (H.R. 4248) to amend the Securities Exchange Act of 1934 to 

repeal certain disclosure requirements related to conflict minerals, 

and for other purposes, having considered the same, report favorably thereon without amendment and recommend that the bill do 

pass. 

PURPOSE AND SUMMARY

On November 3, 2017, Representative Bill Huizenga introduced 

H.R. 4248 to repeal Section 1502 of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act (‘‘Dodd-Frank Act’’) (P.L. 

111–203), which requires public companies to disclose in annual reports filed with the Securities and Exchange Commission (SEC) 

whether the company sources ‘‘conflict minerals’’ tin, tungsten, tantalum, and gold from the Democratic Republic of Congo and its 

nine neighboring countries. 

BACKGROUND AND NEED FOR LEGISLATION

H.R. 4248 reinforces the fact that the purpose of the federal securities laws and its disclosure regime is to provide material information to shareholders or potential investors so that they can make 

appropriately informed investment decisions. When legislation 

2 

forces investors to read superfluous information that requires public companies to disclose information to satisfy politically motivated 

interests, it thwarts the purpose of the federal securities laws and 

undermines the interests of investors. 

Section 1502 of the Dodd-Frank Act not only is unnecessary, it 

presents new challenges for the SEC. The SEC is ill-equipped to 

handle rulemaking requirements that fall outside of its statutory 

mission to protect investors, maintain fair, orderly, and efficient 

markets, and facilitate capital formation. 

As an initial matter, the Dodd-Frank Act’s conflict minerals provisions are explicitly designed to achieve foreign policy objectives 

and bear no relation to the underlying purpose of the federal securities laws, which is to protect investors by providing them with information that is material to their investment decisions and promote the formation of capital. In the words of former SEC Chair 

Mary Jo White: ‘‘Seeking to improve safety in mines for workers or 

to end horrible human rights atrocities in the Democratic Republic 

of the Congo are compelling objectives, which, as a citizen, I wholeheartedly share. But, as the Chair of the SEC, I must question, as 

a policy matter, using the federal securities laws and the SEC’s 

powers of mandatory disclosure to accomplish these goals.’’ 

Former SEC Chair White’s words are echoed in the revised rule 

the SEC issued to implement Section 1502, following the judicial 

rejection of its first attempt: ‘‘The use of securities law disclosure 

requirements to advance foreign policy objectives is uncommon, 

and therefore foreign policy is not a topic we routinely address in 

our rulemaking.’’ Writing in the Fordham Law Review, Karen 

Woody, Assistant Professor of Law at Indiana University, argues 

that the mission creep imposed by foreign policy-related disclosure 

requirements threatens the SEC’s effectiveness. Section 1502, she 

writes, ‘‘flies in the face of the SEC’s mandate. . . . Furthermore, 

requiring the SEC to enforce these disclosure requirements 

stretches thin an already overburdened agency and demands that 

it oversee diplomatic and humanitarian regulations for which it 

lacks the institutional competence.’’ 

Additionally, by imposing enormous compliance costs on public 

companies, Section 1502 impedes the ability of those firms to innovate, grow, and create jobs, while at the same time lowering the 

returns they can offer their investors. In its economic analysis of 

the final rule to implement Section 1502, the SEC estimated the 

initial cost of compliance as ‘‘between approximately $3 billion to 

$4 billion, while the annual cost of ongoing compliance will be between $207 million and $609 million.’’ 

To illustrate just how far out of its lane Section 1502 requires 

the SEC to operate, since the SEC issued its disclosure rule in August 2012, federal courts have highlighted the unconstitutionality 

of certain requirements. In April 2014, a panel of the U.S. Court 

of Appeals for the D.C. Circuit ruled that forcing companies to describe the conflict-free status of their products violated their First 

Amendment rights. This decision was upheld by the same threejudge panel in August 2015, with the court also noting that the 

SEC had failed to demonstrate that its rulemaking would alleviate 

the humanitarian crisis in the Dominican Republic of Congo. The 

SEC and Amnesty International requested an en banc rehearing 

before the full D.C. Circuit, but this petition was denied. The JusVerDate Sep 11 2014 05:52 Feb 21, 2018 Jkt 079006 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\HR570.XXX HR570
3 

tice Department later declined to seek Supreme Court review of the 

decision. 

On April 3, 2017, the U.S. District Court for the District of Columbia entered final judgment in the case. The district court set 

aside those portions of the rule that require companies to report to 

the SEC and state on their website that any of their products ‘‘have 

not been found to be DRC conflict free,’’’ but that court and the 

Court of Appeals left open the question of whether this description 

is required by the statute or, rather, had been a product of the 

SEC’s rulemaking. In response to the decision, SEC Commissioner 

Michael Piwowar while serving as Acting Chairman—issued a 

statement indicating he has directed the staff to consider whether 

and how the rule can be changed to avoid the ‘‘constitutional defect 

identified by the court.’’ In the meantime, the SEC staff has indicated that it would not recommend enforcement action against 

companies that decide not to file a Conflict Minerals report as an 

exhibit to their annual Form Specialized Disclosure or Form SD. In 

his testimony before the Senate Banking Committee on September 

26, 2017, SEC Chairman Jay Clayton reiterated that the SEC is reviewing the rule and has issued no-action guidance on the rule in 

the interim. 

Section 1502’s constitutional and procedural deficiencies have 

been compounded by the damage it has done to the citizens of Central Africa, the very region it purports to help. Critics, many from 

the region itself, argue that Section 1502 has led to a de facto embargo on the region’s minerals, further impoverishing Africans 

while leaving local militias unaffected. In one letter to the SEC, 

leaders from three Congolese mining cooperatives wrote, ‘‘We the 

local population in the areas that will be the most effected [sic] by 

your proposed legislation Dodd-Frank Bill, have not been consulted. . . .’’ Noting that the SEC’s rule would lead to a boycott of 

their minerals, the Congolese went on to plead, ‘‘[W]e cannot continue to suffer any longer. Do we now have to choose between 

dying by a bullet or starving to death?’’ 

A New York Times investigation in 2011 painted an even bleaker 

picture of what locals refer to as the ‘‘Loi Obama’’ (the Obama LawDodd-Frank), noting that ‘‘the Dodd-Frank law has had unintended 

and devastating consequences,’’ and ‘‘has brought about a de facto 

embargo on the minerals mined in the region.’’ The author explains 

that 

Villagers who relied on their mining income to buy food 

when harvests failed are beginning to go hungry. . . . 

Meanwhile, [Dodd-Frank] is benefiting some of the very 

people it was meant to single out. The chief beneficiary is 

Gen. Bosco Ntaganda, who is nicknamed The Terminator 

and is sought by the International Criminal Court. Ostensibly a member of the Congolese Army, he is in fact a freelance killer with his own ethnic Tutsi militia, which provides ‘‘security’’ to traders smuggling minerals across the 

border to neighboring Rwanda. 

Another letter signed by more than 70 researchers and Africa observers, many from Congo itself, echoed the charge that the Congolese had been excluded from policymaking that profoundly affected 

their livelihoods. ‘‘As a result,’’ the signatories concluded, ‘‘the conVerDate Sep 11 2014 05:52 Feb 21, 2018 Jkt 079006 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\HR570.XXX HR570
4 

flict minerals movement has yet to lead to meaningful improvement on the ground, and has had a number of unintended and 

damaging consequences.’’ Indeed, a recent study found that ‘‘instead of reducing violence, the evidence indicates the [Dodd-Frank 

conflict minerals regime] increased the incidents in which armed 

groups looted civilians and committed violence against them.’’ 

In addition to the harm inflicted on Africans, research has shown 

that the SEC’s rule has not illuminated companies’ sourcing of conflict minerals to any meaningful degree. According to the GAO, initial company disclosures have revealed little: 67% of companies reported not being able to determine their minerals’ country of origin, 

and another 3% did not provide a clear determination. No company 

in GAO’s sample could determine whether its minerals financed 

armed groups. GAO confirmed these findings the following year, 

with 67% of companies still unable to confirm the source of their 

conflict minerals, and 97% reporting that they could not determine 

whether those minerals benefitted armed groups in the DRC. 

Professor Jeff Schwartz of the University of Utah Law School has 

come to similar conclusions, having reviewed 1,300 inaugural filings under Section 1502. He writes, ‘‘The overall picture is not 

pretty. I argue that the filings do not contain sufficient information 

about conflict-mineral supply chains for the legislation to work as 

intended, and that this is the result of shortcomings in the original 

law, in the SEC rules that followed, and in the corporate compliance effort.’’ 

Even the U.S. government has found tracing minerals to armed 

groups to be an impossible task: in a 2014 analysis mandated by 

Dodd-Frank, the Commerce Department reported it was unable to 

determine whether smelters drew on minerals that benefited 

armed groups—‘‘We do not have the ability to distinguish such facilities.’’ 

On October 6, 2017, the U.S. Department of the Treasury released its report on Capital Markets, issued pursuant to President 

Trump’s February 3, 2017 Executive Order 13772. Regarding SEC 

disclosures, the Treasury report observed that ‘‘Materiality is an 

objective standard based on the reasonable investor, as opposed to 

a subjective standard that is based on what a particular investor 

may view as important. Unfortunately, amendments in DoddFrank to the federal securities laws have imposed requirements to 

disclose information that is not material to the reasonable investor 

for making investment decisions, including information related to 

conflict minerals.’’ 

While Treasury recognized the original support for the provisions 

was well-intentioned, it echoed the concerns of former SEC Chair 

Mary Jo White and others that the federal securities laws are illequipped to achieve such policy goals. The Treasury report also 

noted that the intent of influencing business conduct is undermined 

by only imposing requirements on public companies and not on private companies. Treasury recommended that Congress repeal Section 1502 and any rules issued pursuant to this section, and that 

if Congress determines this disclosure should be required for companies, this oversight should be moved to a ‘‘more appropriate federal agency, such as the Departments of State, Commerce, Homeland Security, Labor, or Energy.’’ H.R. 1502 makes good on the 

5 

most important piece of this recommendation: removing immaterial 

disclosures from the federal securities laws and the SEC’s purview. 

HEARINGS

The Committee on Financial Services held a hearing examining 

matters relating to H.R. 4248 on April 26, 2017 and April 28, 2017. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on November 14, 2017 and November 15, 2017 and ordered H.R. 4248 to 

be reported favorably to the House by a recorded vote of 32 yeas 

to 27 nays (Record vote no. FC–110), a quorum being present. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. The sole recorded 

vote was on a motion by Chairman Hensarling to report the bill favorably to the House without amendment. The motion was agreed 

to by a recorded vote of 32 yeas to 27 nays (Record vote no. FC– 

110), a quorum being present. 

6 


Insert offset folio 7 here HR570A.001
7 

COMMITTEE OVERSIGHT FINDINGS

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the House 

of Representatives, the findings and recommendations of the Committee based on oversight activities under clause 2(b)(1) of rule X 

of the Rules of the House of Representatives, are incorporated in 

the descriptive portions of this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee states that H.R. 4248 will remove burdensome compliance costs on public companies and return 

the securities laws to their intent of providing material information 

to investors by repealing Section 1502 of the Dodd Frank Act. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of new budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE ESTIMATES

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the House 

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, February 16, 2018. 

Hon. JEB HENSARLING, 

Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 4248, a bill to amend the 

Securities Exchange Act of 1934 to repeal certain disclosure requirements related to conflict minerals, and for other purposes. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Stephen Rabent. 

Sincerely, 

KEITH HALL, Director. 

H.R. 4248—A bill to amend the Securities Exchange Act of 1934 to 

repeal certain disclosure requirements related to conflict minerals, and for other purposes 

Under current law, the Securities and Exchange Commission 

(SEC) requires certain companies to disclose their use of conflict 

minerals that originate from the Democratic Republic of the Congo 

or an adjoining country in an annual report to the agency and to 

make that information available on the reporting company’s 

8 

1 Conflict minerals are those that the Secretary of State has identified as helping finance conflict in the Democratic Republic of the Congo and adjoining countries in Africa. The list includes 

cassiterite, columbite-tantalite, gold, wolframite, and their derivatives. 

website.1 The Department of Commerce, the Government Accountability Office, and the Department of State also are required to 

produce certain reports on conflict minerals and on the accuracy of 

company reporting. H.R. 4248 would repeal those requirements. 

Using information from the SEC, CBO estimates that implementing H.R. 4248 would have an insignificant effect on the affected agencies’ costs and operations. Moreover, the SEC is authorized to collect fees sufficient to offset its annual appropriation; 

therefore, CBO estimates that the net effect on discretionary 

spending from implementing the bill would be negligible, assuming 

appropriation actions consistent with that authority. Furthermore, 

CBO estimates that repealing the reporting requirements for the 

other federal agencies would reduce spending subject to appropriation by less than $500,000 a year. 

Enacting H.R. 4248 would not affect direct spending or revenues; 

therefore, pay-as-you-go procedures do not apply. 

CBO estimates that enacting H.R. 4248 would not increase net 

direct spending or on-budget deficits in any of the four consecutive 

10-year periods beginning in 2028. 

The bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act. 

The CBO staff contact for this estimate is Stephen Rabent. The 

estimate was approved by H. Samuel Papenfuss, Deputy Assistant 

Director for Budget Analysis. 

FEDERAL MANDATES STATEMENT

This information is provided in accordance with section 423 of 

the Unfunded Mandates Reform Act of 1995. 

The Committee has determined that the bill does not contain 

Federal mandates on the private sector. The Committee has determined that the bill does not impose a Federal intergovernmental 

mandate on State, local, or tribal governments. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of the section 102(b)(3) of the 

Congressional Accountability Act. 

EARMARK IDENTIFICATION

With respect to clause 9 of rule XXI of the Rules of the House 

of Representatives, the Committee has carefully reviewed the provisions of the bill and states that the provisions of the bill do not 

contain any congressional earmarks, limited tax benefits, or limited 

tariff benefits within the meaning of the rule. 

9 

DUPLICATION OF FEDERAL PROGRAMS

In compliance with clause 3(c)(5) of rule XIII of the Rules of the 

House of Representatives, the Committee states that no provision 

of the bill establishes or reauthorizes: (1) a program of the Federal 

Government known to be duplicative of another Federal program; 

(2) a program included in any report from the Government Accountability Office to Congress pursuant to section 21 of Public 

Law 111–139; or (3) a program related to a program identified in 

the most recent Catalog of Federal Domestic Assistance, published 

pursuant to the Federal Program Information Act (Pub. L. No. 95– 

220, as amended by Pub. L. No. 98–169). 

DISCLOSURE OF DIRECTED RULEMAKING

Pursuant to section 3(i) of H. Res. 5, (115th Congress), the following statement is made concerning directed rulemakings: The 

Committee estimates that the bill requires no directed rulemakings 

within the meaning of such section. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Repeal of conflict mineral requirements 

This section repeals subsection (p) of section 13 of the Securities 

Exchange Act of 1934, and consequently amends the Dodd-Frank 

Act to strike section 1502, to eliminate the requirement that companies disclose to the SEC whether the company sources ‘‘conflict 

minerals.’’ 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (new matter is printed in italics, 

and existing law in which no change is proposed is shown in 

roman): 

SECURITIES EXCHANGE ACT OF 1934 

TITLE I—REGULATION OF SECURITIES EXCHANGES 

* * * * * * * 

PERIODICAL AND OTHER REPORTS

SEC. 13. (a) Every issuer of a security registered pursuant to section 12 of this title shall file with the Commission, in accordance 

with such rules and regulations as the Commission may prescribe 

10 

as necessary or appropriate for the proper protection of investors 

and to insure fair dealing in the security— 

(1) such information and documents (and such copies thereof) 

as the Commission shall require to keep reasonably current 

the information and documents required to be included in or 

filed with an application or registration statement filed pursuant to section 12, except that the Commission may not require 

the filing of any material contract wholly executed before July 

1, 1962. 

(2) such annual reports (and such copies thereof), certified if 

required by the rules and regulations of the Commission by 

independent public accountants, and such quarterly reports 

(and such copies thereof), as the Commission may prescribe. 

Every issuer of a security registered on a national securities exchange shall also file a duplicate original of such information, documents, and reports with the exchange. In any registration statement, periodic report, or other reports to be filed with the Commission, an emerging growth company need not present selected financial data in accordance with section 229.301 of title 17, Code of 

Federal Regulations, for any period prior to the earliest audited period presented in connection with its first registration statement 

that became effective under this Act or the Securities Act of 1933 

and, with respect to any such statement or reports, an emerging 

growth company may not be required to comply with any new or 

revised financial accounting standard until such date that a company that is not an issuer (as defined under section 2(a) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(a))) is required to comply 

with such new or revised accounting standard, if such standard applies to companies that are not issuers. 

(b)(1) The Commission may prescribe, in regard to reports made 

pursuant to this title, the form or forms in which the required information shall be set forth, the items or details to be shown in the 

balance sheet and the earnings statement, and the methods to be 

followed in the preparation of reports, in the appraisal or valuation 

of assets and liabilities, in the determination of depreciation and 

depletion, in the differentiation of recurring and nonrecurring income, in the differentiation of investment and operating income, 

and in the preparation, where the Commission deems it necessary 

or desirable, of separate and/or consolidated balance sheets or income accounts of any person directly or indirectly controlling or 

controlled by the issuer, or any person under direct or indirect common control with the issuer; but in the case of the reports of any 

person whose methods of accounting are prescribed under the provisions of any law of the United States, or any rule or regulation 

thereunder, the rules and regulations of the Commission with respect to reports shall not be inconsistent with the requirements imposed by such law or rule or regulation in respect of the same subject matter (except that such rules and regulations of the Commission may be inconsistent with such requirements to the extent that 

the Commission determines that the public interest or the protection of investors so requires). 

(2) Every issuer which has a class of securities registered pursuant to section 12 of this title and every issuer which is required to 

file reports pursuant to section 15(d) of this title shall— 

11 

(A) make and keep books, records, and accounts, which, in 

reasonable detail, accurately and fairly reflect the transactions 

and dispositions of the assets of the issuer; 

(B) devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that— 

(i) transactions are executed in accordance with management’s general or specific authorization; 

(ii) transactions are recorded as necessary (I) to permit 

preparation of financial statements in conformity with generally accepted accounting principles or any other criteria 

applicable to such statements, and (II) to maintain accountability for assets; 

(iii) access to assets is permitted only in accordance with 

management’s general or specific authorization; and 

(iv) the recorded accountability for assets is compared 

with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and 

(C) notwithstanding any other provision of law, pay the allocable share of such issuer of a reasonable annual accounting 

support fee or fees, determined in accordance with section 109 

of the Sarbanes-Oxley Act of 2002. 

(3)(A) With respect to matters concerning the national security of 

the United States, no duty or liability under paragraph (2) of this 

subsection shall be imposed upon any person acting in cooperation 

with the head of any Federal department or agency responsible for 

such matters if such act in cooperation with such head of a department or agency was done upon the specific, written directive of the 

head of such department or agency pursuant to Presidential authority to issue such directives. Each directive issued under this 

paragraph shall set forth the specific facts and circumstances with 

respect to which the provisions of this paragraph are to be invoked. 

Each such directive shall, unless renewed in writing, expire one 

year after the date of issuance. 

(B) Each head of a Federal department or agency of the United 

States who issues a directive pursuant to this paragraph shall 

maintain a complete file of all such directives and shall, on October 

1 of each year, transmit a summary of matters covered by such directives in force at any time during the previous year to the Permanent Select Committee on Intelligence of the House of Representatives and the Select Committee on Intelligence of the Senate. 

(4) No criminal liability shall be imposed for failing to comply 

with the requirements of paragraph (2) of this subsection except as 

provided in paragraph (5) of this subsection. 

(5) No person shall knowingly circumvent or knowingly fail to 

implement a system of internal accounting controls or knowingly 

falsify any book, record, or account described in paragraph (2). 

(6) Where an issuer which has a class of securities registered 

pursuant to section 12 of this title or an issuer which is required 

to file reports pursuant to section 15(d) of this title holds 50 per 

centum or less of the voting power with respect to a domestic or 

foreign firm, the provisions of paragraph (2) require only that the 

issuer proceed in good faith to use its influence, to the extent reasonable under the issuer’s circumstances, to cause such domestic or 

foreign firm to devise and maintain a system of internal accounting 

controls consistent with paragraph (2). Such circumstances include 

12 

the relative degree of the issuer’s ownership of the domestic or foreign firm and the laws and practices governing the business operations of the country in which such firm is located. An issuer which 

demonstrates good faith efforts to use such influence shall be conclusively presumed to have complied with the requirements of 

paragraph (2). 

(7) For the purpose of paragraph (2) of this subsection, the terms 

‘‘reasonable assurances’’ and ‘‘reasonable detail’’ mean such level of 

detail and degree of assurance as would satisfy prudent officials in 

the conduct of their own affairs. 

(c) If in the judgment of the Commission any report required 

under subsection (a) is inapplicable to any specified class or classes 

of issuers, the Commission shall require in lieu thereof the submission of such reports of comparable character as it may deem applicable to such class or classes of issuers. 

(d)(1) Any person who, after acquiring directly or indirectly the 

beneficial ownership of any equity security of a class which is registered pursuant to section 12 of this title, or any equity security 

of an insurance company which would have been required to be so 

registered except for the exemption contained in section 12(g)(2)(G) 

of this title, or any equity security issued by a closed-end investment company registered under the Investment Company Act of 

1940 or any equity security issued by a Native Corporation pursuant to section 37(d)(6) of the Alaska Native Claims Settlement Act, 

or otherwise becomes or is deemed to become a beneficial owner of 

any of the foregoing upon the purchase or sale of a security-based 

swap that the Commission may define by rule, and is directly or 

indirectly the beneficial owner of more than 5 per centum of such 

class shall, within ten days after such acquisition or within such 

shorter time as the Commission may establish by rule, file with the 

Commission, a statement containing such of the following information, and such additional information, as the Commission may by 

rules and regulations, prescribe as necessary or appropriate in the 

public interest or for the protection of investors— 

(A) the background, and identity, residence, and citizenship 

of, and the nature of such beneficial ownership by, such person 

and all other persons by whom or on whose behalf the purchases have been or are to be effected; 

(B) the source and amount of the funds or other consideration used or to be used in making the purchases, and if any 

part of the purchase price is represented or is to be represented by funds or other consideration borrowed or otherwise 

obtained for the purpose of acquiring, holding, or trading such 

security, a description of the transaction and the names of the 

parties thereto, except that where a source of funds is a loan 

made in the ordinary course of business by a bank, as defined 

in section 3(a)(6) of this title, if the person filing such statement so requests, the name of the bank shall not be made 

available to the public; 

(C) if the purpose of the purchases or prospective purchases 

is to acquire control of the business of the issuer of the securities any plans or proposals which such persons may have to 

liquidate such issuer, to sell its assets to or merge it with any 

other persons, or to make any other major change in its business or corporate structure; 

13 

(D) the number of shares of such security which are beneficially owned, and the number of shares concerning which 

there is a right to acquire, directly or indirectly, by (i) such 

person, and (ii) by each associate of such person, giving the 

background, identity, residence, and citizenship of each such 

associate; and 

(E) information as to any contracts, arrangements, or understandings with any person with respect to any securities of the 

issuer, including but not limited to transfer of any of the securities, joint ventures, loan or option arrangements, puts or 

calls, guaranties of loans, guaranties against loss or guaranties 

of profits, division of losses or profits, or the giving or withholding of proxies, naming the persons with whom such contracts, arrangements, or understandings have been entered 

into, and giving the details thereof. 

(2) If any material change occurs in the facts set forth in the 

statement filed with the Commission, an amendment shall be filed 

with the Commission, in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate 

in the public interest or for the protection of investors. 

(3) When two or more persons act as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, 

holding, or disposing of securities of an issuer, such syndicate or 

group shall be deemed a ‘‘person’’ for the purposes of this subsection. 

(4) In determining, for purposes of this subsection, any percentage of a class of any security, such class shall be deemed to consist 

of the amount of the outstanding securities of such class, exclusive 

of any securities of such class held by or for the account of the 

issuer or a subsidiary of the issuer. 

(5) The Commission, by rule or regulation or by order, may permit any person to file in lieu of the statement required by paragraph (1) of this subsection or the rules and regulations thereunder, a notice stating the name of such person, the number of 

shares of any equity securities subject to paragraph (1) which are 

owned by him, the date of their acquisition and such other information as the Commission may specify, if it appears to the Commission that such securities were acquired by such person in the ordinary course of his business and were not acquired for the purpose 

of and do not have the effect of changing or influencing the control 

of the issuer nor in connection with or as a participant in any 

transaction having such purpose or effect. 

(6) The provisions of this subsection shall not apply to— 

(A) any acquisition or offer to acquire securities made or proposed to be made by means of a registration statement under 

the Securities Act of 1933; 

(B) any acquisition of the beneficial ownership of a security 

which, together with all other acquisitions by the same person 

of securities of the same class during the preceding twelve 

months, does not exceed 2 per centum of that class; 

(C) any acquisition of an equity security by the issuer of such 

security; 

(D) any acquisition or proposed acquisition of a security 

which the Commission, by rules or regulations or by order, 

shall exempt from the provisions of this subsection as not enVerDate Sep 11 2014 05:52 Feb 21, 2018 Jkt 079006 PO 00000 Frm 00013 Fmt 6659 Sfmt 6601 E:\HR\OC\HR570.XXX HR570
14 

tered into for the purpose of, and not having the effect of, 

changing or influencing the control of the issuer or otherwise 

as not comprehended within the purposes of this subsection. 

(e)(1) It shall be unlawful for an issuer which has a class of equity securities registered pursuant to section 12 of this title, or 

which is a closed-end investment company registered under the Investment Company Act of 1940, to purchase any equity security 

issued by it if such purchase is in contravention of such rules and 

regulations as the Commission, in the public interest or for the protection of investors, may adopt (A) to define acts and practices 

which are fraudulent, deceptive, or manipulative, and (B) to prescribe means reasonably designed to prevent such acts and practices. Such rules and regulations may require such issuer to provide holders of equity securities of such class with such information 

relating to the reasons for such purchase, the source of funds, the 

number of shares to be purchased, the price to be paid for such securities, the method of purchase, and such additional information, 

as the Commission deems necessary or appropriate in the public interest or for the protection of investors, or which the Commission 

deems to be material to a determination whether such security 

should be sold. 

(2) For the purpose of this subsection, a purchase by or for the 

issuer or any person controlling, controlled by, or under common 

control with the issuer, or a purchase subject to control of the 

issuer or any such person, shall be deemed to be a purchase by the 

issuer. The Commission shall have power to make rules and regulations implementing this paragraph in the public interest and for 

the protection of investors, including exemptive rules and regulations covering situations in which the Commission deems it unnecessary or inappropriate that a purchase of the type described in 

this paragraph shall be deemed to be a purchase by the issuer for 

purposes of some or all of the provisions of paragraph (1) of this 

subsection. 

(3) At the time of filing such statement as the Commission may 

require by rule pursuant to paragraph (1) of this subsection, the 

person making the filing shall pay to the Commission a fee at a 

rate that, subject to paragraph (4), is equal to $92 per $1,000,000 

of the value of securities proposed to be purchased. The fee shall 

be reduced with respect to securities in an amount equal to any fee 

paid with respect to any securities issued in connection with the 

proposed transaction under section 6(b) of the Securities Act of 

1933, or the fee paid under that section shall be reduced in an 

amount equal to the fee paid to the Commission in connection with 

such transaction under this paragraph. 

(4) ANNUAL ADJUSTMENT.—For each fiscal year, the Commission shall by order adjust the rate required by paragraph (3) 

for such fiscal year to a rate that is equal to the rate (expressed in dollars per million) that is applicable under section 

6(b) of the Securities Act of 1933 for such fiscal year. 

(5) FEE COLLECTIONS.—Fees collected pursuant to this subsection for fiscal year 2012 and each fiscal year thereafter shall 

be deposited and credited as general revenue of the Treasury 

and shall not be available for obligation. 

(6) EFFECTIVE DATE; PUBLICATION.—In exercising its authority under this subsection, the Commission shall not be required 

15 

to comply with the provisions of section 553 of title 5, United 

States Code. An adjusted rate prescribed under paragraph (4) 

shall be published and take effect in accordance with section 

6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)). 

(7) PRO RATA APPLICATION.—The rates per $1,000,000 required by this subsection shall be applied pro rata to amounts 

and balances of less than $1,000,000. 

(f)(1) Every institutional investment manager which uses the 

mails, or any means or instrumentality of interstate commerce in 

the course of its business as an institutional investment manager 

and which exercises investment discretion with respect to accounts 

holding equity securities of a class described in section 13(d)(1) of 

this title having an aggregate fair market value on the last trading 

day in any of the preceding twelve months of at least $100,000,000 

or such lesser amount (but in no case less than $10,000,000) as the 

Commission, by rule, may determine, shall file reports with the 

Commission in such form, for such periods, and at such times after 

the end of such periods as the Commission, by rule, may prescribe, 

but in no event shall such reports be filed for periods longer than 

one year or shorter than one quarter. Such reports shall include for 

each such equity security held on the last day of the reporting period by accounts (in aggregate or by type as the Commission, by 

rule, may prescribe) with respect to which the institutional investment manager exercises investment discretion (other than securities held in amounts which the Commission, by rule, determines to 

be insignificant for purposes of this subsection), the name of the 

issuer and the title, class, CUSIP number, number of shares or 

principal amount, and aggregate fair market value of each such security. Such reports may also include for accounts (in aggregate or 

by type) with respect to which the institutional investment manager exercises investment discretion such of the following information as the Commission, by rule, prescribes— 

(A) the name of the issuer and the title, class, CUSIP number, number of shares or principal amount, and aggregate fair 

market value or cost or amortized cost of each other security 

(other than an exempted security) held on the last day of the 

reporting period by such accounts; 

(B) the aggregate fair market value or cost or amortized cost 

of exempted securities (in aggregate or by class) held on the 

last day of the reporting period by such accounts; 

(C) the number of shares of each equity security of a class 

described in section 13(d)(1) of this title held on the last day 

of the reporting period by such accounts with respect to which 

the institutional investment manager possesses sole or shared 

authority to exercise the voting rights evidenced by such securities; 

(D) the aggregate purchases and aggregate sales during the 

reporting period of each security (other than an exempted security) effected by or for such accounts; and 

(E) with respect to any transaction or series of transactions 

having a market value of at least $500,000 or such other 

amount as the Commission, by rule, may determine, effected 

during the reporting period by or for such accounts in any equity security of a class described in section 13(d)(1) of this 

title— 

16 

(i) the name of the issuer and the title, class, and CUSIP 

number of the security; 

(ii) the number of shares or principal amount of the security involved in the transaction; 

(iii) whether the transaction was a purchase or sale; 

(iv) the per share price or prices at which the transaction was effected; 

(v) the date or dates of the transaction; 

(vi) the date or dates of the settlement of the transaction; 

(vii) the broker or dealer through whom the transaction 

was effected; 

(viii) the market or markets in which the transaction 

was effected; and 

(ix) such other related information as the Commission, 

by rule, may prescribe. 

(2) The Commission shall prescribe rules providing for the 

public disclosure of the name of the issuer and the title, class, 

CUSIP number, aggregate amount of the number of short sales 

of each security, and any additional information determined by 

the Commission following the end of the reporting period. At 

a minimum, such public disclosure shall occur every month. 

(3) The Commission, by rule or order, may exempt, conditionally 

or unconditionally, any institutional investment manager or security or any class of institutional investment managers or securities 

from any or all of the provisions of this subsection or the rules 

thereunder. 

(4) The Commission shall make available to the public for a reasonable fee a list of all equity securities of a class described in section 13(d)(1) of this title, updated no less frequently than reports 

are required to be filed pursuant to paragraph (1) of this subsection. The Commission shall tabulate the information contained 

in any report filed pursuant to this subsection in a manner which 

will, in the view of the Commission, maximize the usefulness of the 

information to other Federal and State authorities and the public. 

Promptly after the filing of any such report, the Commission shall 

make the information contained therein conveniently available to 

the public for a reasonable fee in such form as the Commission, by 

rule, may prescribe, except that the Commission, as it determines 

to be necessary or appropriate in the public interest or for the protection of investors, may delay or prevent public disclosure of any 

such information in accordance with section 552 of title 5, United 

States Code. Notwithstanding the preceding sentence, any such information identifying the securities held by the account of a natural person or an estate or trust (other than a business trust or 

investment company) shall not be disclosed to the public. 

(5) In exercising its authority under this subsection, the Commission shall determine (and so state) that its action is necessary or 

appropriate in the public interest and for the protection of investors or to maintain fair and orderly markets or, in granting an exemption, that its action is consistent with the protection of investors and the purposes of this subsection. In exercising such authority the Commission shall take such steps as are within its power, 

including consulting with the Comptroller General of the United 

States, the Director of the Office of Management and Budget, the 

17 

appropriate regulatory agencies, Federal and State authorities 

which, directly or indirectly, require reports from institutional investment managers of information substantially similar to that 

called for by this subsection, national securities exchanges, and 

registered securities associations, (A) to achieve uniform, centralized reporting of information concerning the securities holdings of 

and transactions by or for accounts with respect to which institutional investment managers exercise investment discretion, and (B) 

consistently with the objective set forth in the preceding subparagraph, to avoid unnecessarily duplicative reporting by, and minimize the compliance burden on, institutional investment managers. 

Federal authorities which, directly or indirectly, require reports 

from institutional investment managers of information substantially similar to that called for by this subsection shall cooperate 

with the Commission in the performance of its responsibilities 

under the preceding sentence. An institutional investment manager 

which is a bank, the deposits of which are insured in accordance 

with the Federal Deposit Insurance Act, shall file with the appropriate regulatory agency a copy of every report filed with the Commission pursuant to this subsection. 

(6)(A) For purposes of this subsection the term ‘‘institutional investment manager’’ includes any person, other than a natural person, investing in or buying and selling securities for its own account, and any person exercising investment discretion with respect to the account of any other person. 

(B) The Commission shall adopt such rules as it deems necessary 

or appropriate to prevent duplicative reporting pursuant to this 

subsection by two or more institutional investment managers exercising investment discretion with respect to the same amount. 

(g)(1) Any person who is directly or indirectly the beneficial 

owner of more than 5 per centum of any security of a class described in subsection (d)(1) of this section or otherwise becomes or 

is deemed to become a beneficial owner of any security of a class 

described in subsection (d)(1) upon the purchase or sale of a security-based swap that the Commission may define by ruleshall file 

with the Commission a statement setting forth, in such form and 

at such time as the Commission may, by rule, prescribe— 

(A) such person’s identity, residence, and citizenship; and 

(B) the number and description of the shares in which such 

person has an interest and the nature of such interest. 

(2) If any material change occurs in the facts set forth in the 

statement filed with the Commission, an amendment shall be filed 

with the Commission, in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate 

in the public interest or for the protection of investors. 

(3) When two or more persons act as a partnership, limited partnership, syndicate, or other group for the purpose of acquiring, 

holding, or disposing of securities of an issuer, such syndicate or 

group shall be deemed a ‘‘person’’ for the purposes of this subsection. 

(4) In determining, for purposes of this subsection, any percentage of a class of any security, such class shall be deemed to consist 

of the amount of the outstanding securities of such class, exclusive 

of any securities of such class held by or for the account of the 

issuer or a subsidiary of the issuer. 

18 

(5) In exercising its authority under this subsection, the Commission shall take such steps as it deems necessary or appropriate in 

the public interest or for the protection of investors (A) to achieve 

centralized reporting of information regarding ownership, (B) to 

avoid unnecessarily duplicative reporting by and minimize the compliance burden on persons required to report, and (C) to tabulate 

and promptly make available the information contained in any report filed pursuant to this subsection in a manner which will, in 

the view of the Commission, maximize the usefulness of the information to other Federal and State agencies and the public. 

(6) The Commission may, by rule or order, exempt, in whole or 

in part, any person or class of persons from any or all of the reporting requirements of this subsection as it deems necessary or appropriate in the public interest or for the protection of investors. 

(h) LARGE TRADER REPORTING.— 

(1) IDENTIFICATION REQUIREMENTS FOR LARGE TRADERS.—For 

the purpose of monitoring the impact on the securities markets 

of securities transactions involving a substantial volume or a 

large fair market value or exercise value and for the purpose 

of otherwise assisting the Commission in the enforcement of 

this title, each large trader shall— 

(A) provide such information to the Commission as the 

Commission may by rule or regulation prescribe as necessary or appropriate, identifying such large trader and all 

accounts in or through which such large trader effects such 

transactions; and 

(B) identify, in accordance with such rules or regulations 

as the Commission may prescribe as necessary or appropriate, to any registered broker or dealer by or through 

whom such large trader directly or indirectly effects securities transactions, such large trader and all accounts directly or indirectly maintained with such broker or dealer 

by such large trader in or through which such transactions 

are effected. 

(2) RECORDKEEPING AND REPORTING REQUIREMENTS FOR BROKERS AND DEALERS.—Every registered broker or dealer shall 

make and keep for prescribed periods such records as the Commission by rule or regulation prescribes as necessary or appropriate in the public interest, for the protection of investors, or 

otherwise in furtherance of the purposes of this title, with respect to securities transactions that equal or exceed the reporting activity level effected directly or indirectly by or through 

such registered broker or dealer of or for any person that such 

broker or dealer knows is a large trader, or any person that 

such broker or dealer has reason to know is a large trader on 

the basis of transactions in securities effected by or through 

such broker or dealer. Such records shall be available for reporting to the Commission, or any self-regulatory organization 

that the Commission shall designate to receive such reports, on 

the morning of the day following the day the transactions were 

effected, and shall be reported to the Commission or a self-regulatory organization designated by the Commission immediately upon request by the Commission or such a self-regulatory organization. Such records and reports shall be in a forVerDate Sep 11 2014 05:52 Feb 21, 2018 Jkt 079006 PO 00000 Frm 00018 Fmt 6659 Sfmt 6601 E:\HR\OC\HR570.XXX HR570
19 

mat and transmitted in a manner prescribed by the Commission (including, but not limited to, machine readable form). 

(3) AGGREGATION RULES.—The Commission may prescribe 

rules or regulations governing the manner in which transactions and accounts shall be aggregated for the purpose of 

this subsection, including aggregation on the basis of common 

ownership or control. 

(4) EXAMINATION OF BROKER AND DEALER RECORDS.—All 

records required to be made and kept by registered brokers 

and dealers pursuant to this subsection with respect to transactions effected by large traders are subject at any time, or 

from time to time, to such reasonable periodic, special, or other 

examinations by representatives of the Commission as the 

Commission deems necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of this title. 

(5) FACTORS TO BE CONSIDERED IN COMMISSION ACTIONS.—In 

exercising its authority under this subsection, the Commission 

shall take into account— 

(A) existing reporting systems; 

(B) the costs associated with maintaining information 

with respect to transactions effected by large traders and 

reporting such information to the Commission or self-regulatory organizations; and 

(C) the relationship between the United States and 

international securities markets. 

(6) EXEMPTIONS.—The Commission, by rule, regulation, or 

order, consistent with the purposes of this title, may exempt 

any person or class of persons or any transaction or class of 

transactions, either conditionally or upon specified terms and 

conditions or for stated periods, from the operation of this subsection, and the rules and regulations thereunder. 

(7) AUTHORITY OF COMMISSION TO LIMIT DISCLOSURE OF INFORMATION.—Notwithstanding any other provision of law, the 

Commission shall not be compelled to disclose any information 

required to be kept or reported under this subsection. Nothing 

in this subsection shall authorize the Commission to withhold 

information from Congress, or prevent the Commission from 

complying with a request for information from any other Federal department or agency requesting information for purposes 

within the scope of its jurisdiction, or complying with an order 

of a court of the United States in an action brought by the 

United States or the Commission. For purposes of section 552 

of title 5, United States Code, this subsection shall be considered a statute described in subsection (b)(3)(B) of such section 

552. 

(8) DEFINITIONS.—For purposes of this subsection— 

(A) the term ‘‘large trader’’ means every person who, for 

his own account or an account for which he exercises investment discretion, effects transactions for the purchase 

or sale of any publicly traded security or securities by use 

of any means or instrumentality of interstate commerce or 

of the mails, or of any facility of a national securities exchange, directly or indirectly by or through a registered 

20 

broker or dealer in an aggregate amount equal to or in excess of the identifying activity level; 

(B) the term ‘‘publicly traded security’’ means any equity 

security (including an option on individual equity securities, and an option on a group or index of such securities) 

listed, or admitted to unlisted trading privileges, on a national securities exchange, or quoted in an automated 

interdealer quotation system; 

(C) the term ‘‘identifying activity level’’ means transactions in publicly traded securities at or above a level of 

volume, fair market value, or exercise value as shall be 

fixed from time to time by the Commission by rule or regulation, specifying the time interval during which such 

transactions shall be aggregated; 

(D) the term ‘‘reporting activity level’’ means transactions in publicly traded securities at or above a level of 

volume, fair market value, or exercise value as shall be 

fixed from time to time by the Commission by rule, regulation, or order, specifying the time interval during which 

such transactions shall be aggregated; and 

(E) the term ‘‘person’’ has the meaning given in section 

3(a)(9) of this title and also includes two or more persons 

acting as a partnership, limited partnership, syndicate, or 

other group, but does not include a foreign central bank. 

(i) ACCURACY OF FINANCIAL REPORTS.—Each financial report that 

contains financial statements, and that is required to be prepared 

in accordance with (or reconciled to) generally accepted accounting 

principles under this title and filed with the Commission shall reflect all material correcting adjustments that have been identified 

by a registered public accounting firm in accordance with generally 

accepted accounting principles and the rules and regulations of the 

Commission. 

(j) OFF-BALANCE SHEET TRANSACTIONS.—Not later than 180 days 

after the date of enactment of the Sarbanes-Oxley Act of 2002, the 

Commission shall issue final rules providing that each annual and 

quarterly financial report required to be filed with the Commission 

shall disclose all material off-balance sheet transactions, arrangements, obligations (including contingent obligations), and other relationships of the issuer with unconsolidated entities or other persons, that may have a material current or future effect on financial 

condition, changes in financial condition, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenues or expenses. 

(k) PROHIBITION ON PERSONAL LOANS TO EXECUTIVES.— 

(1) IN GENERAL.—It shall be unlawful for any issuer (as defined in section 2 of the Sarbanes-Oxley Act of 2002), directly 

or indirectly, including through any subsidiary, to extend or 

maintain credit, to arrange for the extension of credit, or to 

renew an extension of credit, in the form of a personal loan to 

or for any director or executive officer (or equivalent thereof) 

of that issuer. An extension of credit maintained by the issuer 

on the date of enactment of this subsection shall not be subject 

to the provisions of this subsection, provided that there is no 

material modification to any term of any such extension of 

21 

credit or any renewal of any such extension of credit on or 

after that date of enactment. 

(2) LIMITATION.—Paragraph (1) does not preclude any home 

improvement and manufactured home loans (as that term is 

defined in section 5 of the Home Owners’ Loan Act (12 U.S.C. 

1464)), consumer credit (as defined in section 103 of the Truth 

in Lending Act (15 U.S.C. 1602)), or any extension of credit 

under an open end credit plan (as defined in section 103 of the 

Truth in Lending Act (15 U.S.C. 1602)), or a charge card (as 

defined in section 127(c)(4)(e) of the Truth in Lending Act (15 

U.S.C. 1637(c)(4)(e)), or any extension of credit by a broker or 

dealer registered under section 15 of this title to an employee 

of that broker or dealer to buy, trade, or carry securities, that 

is permitted under rules or regulations of the Board of Governors of the Federal Reserve System pursuant to section 7 of 

this title (other than an extension of credit that would be used 

to purchase the stock of that issuer), that is— 

(A) made or provided in the ordinary course of the consumer credit business of such issuer; 

(B) of a type that is generally made available by such 

issuer to the public; and 

(C) made by such issuer on market terms, or terms that 

are no more favorable than those offered by the issuer to 

the general public for such extensions of credit. 

(3) RULE OF CONSTRUCTION FOR CERTAIN LOANS.—Paragraph 

(1) does not apply to any loan made or maintained by an insured depository institution (as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)), if the loan is subject to the insider lending restrictions of section 22(h) of the 

Federal Reserve Act (12 U.S.C. 375b). 

(l) REAL TIME ISSUER DISCLOSURES.—Each issuer reporting 

under section 13(a) or 15(d) shall disclose to the public on a rapid 

and current basis such additional information concerning material 

changes in the financial condition or operations of the issuer, in 

plain English, which may include trend and qualitative information 

and graphic presentations, as the Commission determines, by rule, 

is necessary or useful for the protection of investors and in the public interest. 

(m) PUBLIC AVAILABILITY OF SECURITY-BASED SWAP TRANSACTION

DATA.— 

(1) IN GENERAL.— 

(A) DEFINITION OF REAL-TIME PUBLIC REPORTING.—In 

this paragraph, the term ‘‘real-time public reporting’’ 

means to report data relating to a security-based swap 

transaction, including price and volume, as soon as technologically practicable after the time at which the securitybased swap transaction has been executed. 

(B) PURPOSE.—The purpose of this subsection is to authorize the Commission to make security-based swap 

transaction and pricing data available to the public in such 

form and at such times as the Commission determines appropriate to enhance price discovery. 

(C) GENERAL RULE.—The Commission is authorized to 

provide by rule for the public availability of security-based 

swap transaction, volume, and pricing data as follows: 

22 

(i) With respect to those security-based swaps that 

are subject to the mandatory clearing requirement described in section 3C(a)(1) (including those securitybased swaps that are excepted from the requirement 

pursuant to section 3C(g)), the Commission shall require real-time public reporting for such transactions. 

(ii) With respect to those security-based swaps that 

are not subject to the mandatory clearing requirement 

described in section 3C(a)(1), but are cleared at a registered clearing agency, the Commission shall require 

real-time public reporting for such transactions. 

(iii) With respect to security-based swaps that are 

not cleared at a registered clearing agency and which 

are reported to a security-based swap data repository 

or the Commission under section 3C(a)(6), the Commission shall require real-time public reporting for 

such transactions, in a manner that does not disclose 

the business transactions and market positions of any 

person. 

(iv) With respect to security-based swaps that are 

determined to be required to be cleared under section 

3C(b) but are not cleared, the Commission shall require real-time public reporting for such transactions. 

(D) REGISTERED ENTITIES AND PUBLIC REPORTING.—The 

Commission may require registered entities to publicly disseminate the security-based swap transaction and pricing 

data required to be reported under this paragraph. 

(E) RULEMAKING REQUIRED.—With respect to the rule 

providing for the public availability of transaction and 

pricing data for security-based swaps described in clauses 

(i) and (ii) of subparagraph (C), the rule promulgated by 

the Commission shall contain provisions— 

(i) to ensure such information does not identify the 

participants; 

(ii) to specify the criteria for determining what constitutes a large notional security-based swap transaction (block trade) for particular markets and contracts; 

(iii) to specify the appropriate time delay for reporting large notional security-based swap transactions 

(block trades) to the public; and 

(iv) that take into account whether the public disclosure will materially reduce market liquidity. 

(F) TIMELINESS OF REPORTING.—Parties to a securitybased swap (including agents of the parties to a securitybased swap) shall be responsible for reporting securitybased swap transaction information to the appropriate registered entity in a timely manner as may be prescribed by 

the Commission. 

(G) REPORTING OF SWAPS TO REGISTERED SECURITYBASED SWAP DATA REPOSITORIES.—Each security-based 

swap (whether cleared or uncleared) shall be reported to a 

registered security-based swap data repository. 

23 

(H) REGISTRATION OF CLEARING AGENCIES.—A clearing 

agency may register as a security-based swap data repository. 

(2) SEMIANNUAL AND ANNUAL PUBLIC REPORTING OF AGGRE- GATE SECURITY-BASED SWAP DATA.— (A) IN GENERAL.—In accordance with subparagraph (B), 

the Commission shall issue a written report on a semiannual and annual basis to make available to the public 

information relating to— 

(i) the trading and clearing in the major securitybased swap categories; and 

(ii) the market participants and developments in 

new products. 

(B) USE; CONSULTATION.—In preparing a report under 

subparagraph (A), the Commission shall— 

(i) use information from security-based swap data 

repositories and clearing agencies; and 

(ii) consult with the Office of the Comptroller of the 

Currency, the Bank for International Settlements, and 

such other regulatory bodies as may be necessary. 

(C) AUTHORITY OF COMMISSION.—The Commission may, 

by rule, regulation, or order, delegate the public reporting 

responsibilities of the Commission under this paragraph in 

accordance with such terms and conditions as the Commission determines to be appropriate and in the public interest. 

(n) SECURITY-BASED SWAP DATA REPOSITORIES.— (1) REGISTRATION REQUIREMENT.—It shall be unlawful for 

any person, unless registered with the Commission, directly or 

indirectly, to make use of the mails or any means or instrumentality of interstate commerce to perform the functions of a 

security-based swap data repository. 

(2) INSPECTION AND EXAMINATION.—Each registered securitybased swap data repository shall be subject to inspection and 

examination by any representative of the Commission. 

(3) COMPLIANCE WITH CORE PRINCIPLES.— (A) IN GENERAL.—To be registered, and maintain registration, as a security-based swap data repository, the security-based swap data repository shall comply with— 

(i) the requirements and core principles described in 

this subsection; and 

(ii) any requirement that the Commission may impose by rule or regulation. 

(B) REASONABLE DISCRETION OF SECURITY-BASED SWAP

DATA REPOSITORY.—Unless otherwise determined by the 

Commission, by rule or regulation, a security-based swap 

data repository described in subparagraph (A) shall have 

reasonable discretion in establishing the manner in which 

the security-based swap data repository complies with the 

core principles described in this subsection. 

(4) STANDARD SETTING.— (A) DATA IDENTIFICATION.— (i) IN GENERAL.—In accordance with clause (ii), the 

Commission shall prescribe standards that specify the 

data elements for each security-based swap that shall 

24 

be collected and maintained by each registered security-based swap data repository. 

(ii) REQUIREMENT.—In carrying out clause (i), the 

Commission shall prescribe consistent data element 

standards applicable to registered entities and reporting counterparties. 

(B) DATA COLLECTION AND MAINTENANCE.—The Commission shall prescribe data collection and data maintenance 

standards for security-based swap data repositories. 

(C) COMPARABILITY.—The standards prescribed by the 

Commission under this subsection shall be comparable to 

the data standards imposed by the Commission on clearing 

agencies in connection with their clearing of security-based 

swaps. 

(5) DUTIES.—A security-based swap data repository shall— 

(A) accept data prescribed by the Commission for each 

security-based swap under subsection (b); 

(B) confirm with both counterparties to the securitybased swap the accuracy of the data that was submitted; 

(C) maintain the data described in subparagraph (A) in 

such form, in such manner, and for such period as may be 

required by the Commission; 

(D)(i) provide direct electronic access to the Commission 

(or any designee of the Commission, including another registered entity); and 

(ii) provide the information described in subparagraph 

(A) in such form and at such frequency as the Commission 

may require to comply with the public reporting requirements set forth in subsection (m); 

(E) at the direction of the Commission, establish automated systems for monitoring, screening, and analyzing 

security-based swap data; 

(F) maintain the privacy of any and all security-based 

swap transaction information that the security-based swap 

data repository receives from a security-based swap dealer, 

counterparty, or any other registered entity; and 

(G) on a confidential basis pursuant to section 24, upon 

request, and after notifying the Commission of the request, 

make available security-based swap data obtained by the 

security-based swap data repository, including individual 

counterparty trade and position data, to— 

(i) each appropriate prudential regulator; 

(ii) the Financial Stability Oversight Council; 

(iii) the Commodity Futures Trading Commission; 

(iv) the Department of Justice; and 

(v) any other person that the Commission determines to be appropriate, including— 

(I) foreign financial supervisors (including foreign futures authorities); 

(II) foreign central banks; 

(III) foreign ministries; and 

(IV) other foreign authorities. 

(H) CONFIDENTIALITY AGREEMENT.—Before the securitybased swap data repository may share information with 

any entity described in subparagraph (G), the securityVerDate Sep 11 2014 05:52 Feb 21, 2018 Jkt 079006 PO 00000 Frm 00024 Fmt 6659 Sfmt 6601 E:\HR\OC\HR570.XXX HR570
25 

based swap data repository shall receive a written agreement from each entity stating that the entity shall abide 

by the confidentiality requirements described in section 24 

relating to the information on security-based swap transactions that is provided. 

(6) DESIGNATION OF CHIEF COMPLIANCE OFFICER.— 

(A) IN GENERAL.—Each security-based swap data repository shall designate an individual to serve as a chief compliance officer. 

(B) DUTIES.—The chief compliance officer shall— 

(i) report directly to the board or to the senior officer 

of the security-based swap data repository; 

(ii) review the compliance of the security-based swap 

data repository with respect to the requirements and 

core principles described in this subsection; 

(iii) in consultation with the board of the securitybased swap data repository, a body performing a function similar to the board of the security-based swap 

data repository, or the senior officer of the securitybased swap data repository, resolve any conflicts of interest that may arise; 

(iv) be responsible for administering each policy and 

procedure that is required to be established pursuant 

to this section; 

(v) ensure compliance with this title (including regulations) relating to agreements, contracts, or transactions, including each rule prescribed by the Commission under this section; 

(vi) establish procedures for the remediation of noncompliance issues identified by the chief compliance 

officer through any— 

(I) compliance office review; 

(II) look-back; 

(III) internal or external audit finding; 

(IV) self-reported error; or 

(V) validated complaint; and 

(vii) establish and follow appropriate procedures for 

the handling, management response, remediation, retesting, and closing of noncompliance issues. 

(C) ANNUAL REPORTS.— 

(i) IN GENERAL.—In accordance with rules prescribed 

by the Commission, the chief compliance officer shall 

annually prepare and sign a report that contains a description of— 

(I) the compliance of the security-based swap 

data repository of the chief compliance officer with 

respect to this title (including regulations); and 

(II) each policy and procedure of the securitybased swap data repository of the chief compliance 

officer (including the code of ethics and conflict of 

interest policies of the security-based swap data 

repository). 

(ii) REQUIREMENTS.—A compliance report under 

clause (i) shall— 

26 

(I) accompany each appropriate financial report 

of the security-based swap data repository that is 

required to be furnished to the Commission pursuant to this section; and 

(II) include a certification that, under penalty of 

law, the compliance report is accurate and complete. 

(7) CORE PRINCIPLES APPLICABLE TO SECURITY-BASED SWAP

DATA REPOSITORIES.— (A) ANTITRUST CONSIDERATIONS.—Unless necessary or 

appropriate to achieve the purposes of this title, the swap 

data repository shall not— 

(i) adopt any rule or take any action that results in 

any unreasonable restraint of trade; or 

(ii) impose any material anticompetitive burden on 

the trading, clearing, or reporting of transactions. 

(B) GOVERNANCE ARRANGEMENTS.—Each security-based 

swap data repository shall establish governance arrangements that are transparent— 

(i) to fulfill public interest requirements; and 

(ii) to support the objectives of the Federal Government, owners, and participants. 

(C) CONFLICTS OF INTEREST.—Each security-based swap 

data repository shall— 

(i) establish and enforce rules to minimize conflicts 

of interest in the decision-making process of the security-based swap data repository; and 

(ii) establish a process for resolving any conflicts of 

interest described in clause (i). 

(D) ADDITIONAL DUTIES DEVELOPED BY COMMISSION.— 

(i) IN GENERAL.—The Commission may develop 1 or 

more additional duties applicable to security-based 

swap data repositories. 

(ii) CONSIDERATION OF EVOLVING STANDARDS.—In developing additional duties under subparagraph (A), 

the Commission may take into consideration any 

evolving standard of the United States or the international community. 

(iii) ADDITIONAL DUTIES FOR COMMISSION DES- IGNEES.—The Commission shall establish additional 

duties for any registrant described in section 

13(m)(2)(C) in order to minimize conflicts of interest, 

protect data, ensure compliance, and guarantee the 

safety and security of the security-based swap data repository. 

(8) REQUIRED REGISTRATION FOR SECURITY-BASED SWAP DATA

REPOSITORIES.—Any person that is required to be registered as 

a security-based swap data repository under this subsection 

shall register with the Commission, regardless of whether that 

person is also licensed under the Commodity Exchange Act as 

a swap data repository. 

(9) RULES.—The Commission shall adopt rules governing 

persons that are registered under this subsection. 

(o) BENEFICIAL OWNERSHIP.—For purposes ofthis section and section 16, a person shall be deemed to acquire beneficialownership of 

27 

an equity security based on the purchase or sale of asecurity-based 

swap, only to the extent that the Commission, by rule,determines 

after consultation with the prudential regulators and the 

Secretaryof the Treasury, that the purchase or sale of the securitybased swap, or classof security-based swap, provides incidents of 

ownership comparable to directownership of the equity security, 

and that it is necessary to achieve thepurposes of this section that 

the purchase or sale of the security-based swaps,or class of security-based swap, be deemed the acquisition of beneficialownership 

of the equitysecurity. 

ø(p) DISCLOSURES RELATING TO CONFLICT MINERALS ORIGINATING IN THE DEMOCRATIC REPUBLIC OF THE CONGO.— 

ø(1) REGULATIONS.— 

ø(A) IN GENERAL.—Not later than 270 days after the 

date of the enactment of this subsection, the Commission 

shall promulgate regulations requiring any person described in paragraph (2) to disclose annually, beginning 

with the person’s first full fiscal year that begins after the 

date of promulgation of such regulations, whether conflict 

minerals that are necessary as described in paragraph 

(2)(B), in the year for which such reporting is required, did 

originate in the Democratic Republic of the Congo or an 

adjoining country and, in cases in which such conflict minerals did originate in any such country, submit to the 

Commission a report that includes, with respect to the period covered by the report— 

ø(i) a description of the measures taken by the person to exercise due diligence on the source and chain 

of custody of such minerals, which measures shall include an independent private sector audit of such report submitted through the Commission that is conducted in accordance with standards established by 

the Comptroller General of the United States, in accordance with rules promulgated by the Commission, 

in consultation with the Secretary of State; and 

ø(ii) a description of the products manufactured or 

contracted to be manufactured that are not DRC conflict free (‘‘DRC conflict free’’ is defined to mean the 

products that do not contain minerals that directly or 

indirectly finance or benefit armed groups in the 

Democratic Republic of the Congo or an adjoining 

country), the entity that conducted the independent 

private sector audit in accordance with clause (i), the 

facilities used to process the conflict minerals, the 

country of origin of the conflict minerals, and the efforts to determine the mine or location of origin with 

the greatest possible specificity. 

ø(B) CERTIFICATION.—The person submitting a report 

under subparagraph (A) shall certify the audit described in 

clause (i) of such subparagraph that is included in such report. Such a certified audit shall constitute a critical component of due diligence in establishing the source and 

chain of custody of such minerals. 

ø(C) UNRELIABLE DETERMINATION.—If a report required 

to be submitted by a person under subparagraph (A) relies 

28 

on a determination of an independent private sector audit, 

as described under subparagraph (A)(i), or other due diligence processes previously determined by the Commission 

to be unreliable, the report shall not satisfy the requirements of the regulations promulgated under subparagraph 

(A)(i). 

ø(D) DRC CONFLICT FREE.—For purposes of this paragraph, a product may be labeled as ‘‘DRC conflict free’’ if 

the product does not contain conflict minerals that directly 

or indirectly finance or benefit armed groups in the Democratic Republic of the Congo or an adjoining country. 

ø(E) INFORMATION AVAILABLE TO THE PUBLIC.—Each person described under paragraph (2) shall make available to 

the public on the Internet website of such person the information disclosed by such person under subparagraph (A). 

ø(2) PERSON DESCRIBED.—A person is described in this paragraph if— 

ø(A) the person is required to file reports with the Commission pursuant to paragraph (1)(A); and 

ø(B) conflict minerals are necessary to the functionality 

or production of a product manufactured by such person. 

ø(3) REVISIONS AND WAIVERS.—The Commission shall revise 

or temporarily waive the requirements described in paragraph 

(1) if the President transmits to the Commission a determination that— 

ø(A) such revision or waiver is in the national security 

interest of the United States and the President includes 

the reasons therefor; and 

ø(B) establishes a date, not later than 2 years after the 

initial publication of such exemption, on which such exemption shall expire. 

ø(4) TERMINATION OF DISCLOSURE REQUIREMENTS.—The requirements of paragraph (1) shall terminate on the date on 

which the President determines and certifies to the appropriate 

congressional committees, but in no case earlier than the date 

that is one day after the end of the 5-year period beginning on 

the date of the enactment of this subsection, that no armed 

groups continue to be directly involved and benefitting from 

commercial activity involving conflict minerals. 

ø(5) DEFINITIONS.—For purposes of this subsection, the 

terms ‘‘adjoining country’’, ‘‘appropriate congressional committees’’, ‘‘armed group’’, and ‘‘conflict mineral’’ have the meaning 

given those terms under section 1502 of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act.¿ 

(q) DISCLOSURE OF PAYMENTS BY RESOURCE EXTRACTION

ISSUERS.— 

(1) DEFINITIONS.—In this subsection— 

(A) the term ‘‘commercial development of oil, natural 

gas, or minerals’’ includes exploration, extraction, processing, export, and other significant actions relating to oil, 

natural gas, or minerals, or the acquisition of a license for 

any such activity, as determined by the Commission; 

(B) the term ‘‘foreign government’’ means a foreign government, a department, agency, or instrumentality of a 

29 

foreign government, or a company owned by a foreign government, as determined by the Commission; 

(C) the term ‘‘payment’’— 

(i) means a payment that is— 

(I) made to further the commercial development 

of oil, natural gas, or minerals; and 

(II) not de minimis; and 

(ii) includes taxes, royalties, fees (including license 

fees), production entitlements, bonuses, and other material benefits, that the Commission, consistent with 

the guidelines of the Extractive Industries Transparency Initiative (to the extent practicable), determines are part of the commonly recognized revenue 

stream for the commercial development of oil, natural 

gas, or minerals; 

(D) the term ‘‘resource extraction issuer’’ means an 

issuer that— 

(i) is required to file an annual report with the Commission; and 

(ii) engages in the commercial development of oil, 

natural gas, or minerals; 

(E) the term ‘‘interactive data format’’ means an electronic data format in which pieces of information are identified using an interactive data standard; and 

(F) the term ‘‘interactive data standard’’ means standardized list of electronic tags that mark information included in the annual report of a resource extraction issuer. 

(2) DISCLOSURE.— 

(A) INFORMATION REQUIRED.—Not later than 270 days 

after the date of enactment of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, the Commission 

shall issue final rules that require each resource extraction 

issuer to include in an annual report of the resource extraction issuer information relating to any payment made 

by the resource extraction issuer, a subsidiary of the resource extraction issuer, or an entity under the control of 

the resource extraction issuer to a foreign government or 

the Federal Government for the purpose of the commercial 

development of oil, natural gas, or minerals, including— 

(i) the type and total amount of such payments 

made for each project of the resource extraction issuer 

relating to the commercial development of oil, natural 

gas, or minerals; and 

(ii) the type and total amount of such payments 

made to each government. 

(B) CONSULTATION IN RULEMAKING.—In issuing rules 

under subparagraph (A), the Commission may consult with 

any agency or entity that the Commission determines is 

relevant. 

(C) INTERACTIVE DATA FORMAT.—The rules issued under 

subparagraph (A) shall require that the information included in the annual report of a resource extraction issuer 

be submitted in an interactive data format. 

(D) INTERACTIVE DATA STANDARD.— 

30 

(i) IN GENERAL.—The rules issued under subparagraph (A) shall establish an interactive data standard 

for the information included in the annual report of a 

resource extraction issuer. 

(ii) ELECTRONIC TAGS.—The interactive data standard shall include electronic tags that identify, for any 

payments made by a resource extraction issuer to a 

foreign government or the Federal Government— 

(I) the total amounts of the payments, by category; 

(II) the currency used to make the payments; 

(III) the financial period in which the payments 

were made; 

(IV) the business segment of the resource extraction issuer that made the payments; 

(V) the government that received the payments, 

and the country in which the government is located; 

(VI) the project of the resource extraction issuer 

to which the payments relate; and 

(VII) such other information as the Commission 

may determine is necessary or appropriate in the 

public interest or for the protection of investors. 

(E) INTERNATIONAL TRANSPARENCY EFFORTS.—To the extent practicable, the rules issued under subparagraph (A) 

shall support the commitment of the Federal Government 

to international transparency promotion efforts relating to 

the commercial development of oil, natural gas, or minerals. 

(F) EFFECTIVE DATE.—With respect to each resource extraction issuer, the final rules issued under subparagraph 

(A) shall take effect on the date on which the resource extraction issuer is required to submit an annual report relating to the fiscal year of the resource extraction issuer 

that ends not earlier than 1 year after the date on which 

the Commission issues final rules under subparagraph (A). 

(3) PUBLIC AVAILABILITY OF INFORMATION.— 

(A) IN GENERAL.—To the extent practicable, the Commission shall make available online, to the public, a compilation of the information required to be submitted under the 

rules issued under paragraph (2)(A). 

(B) OTHER INFORMATION.—Nothing in this paragraph 

shall require the Commission to make available online information other than the information required to be submitted under the rules issued under paragraph (2)(A). 

(4) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to be appropriated to the Commission such sums as may 

be necessary to carry out this subsection. 

(r) DISCLOSURE OF CERTAIN ACTIVITIES RELATING TO IRAN.— 

(1) IN GENERAL.—Each issuer required to file an annual or 

quarterly report under subsection (a) shall disclose in that report the information required by paragraph (2) if, during the 

period covered by the report, the issuer or any affiliate of the 

issuer— 

31 

(A) knowingly engaged in an activity described in subsection (a) or (b) of section 5 of the Iran Sanctions Act of 

1996 (Public Law 104–172; 50 U.S.C. 1701 note); 

(B) knowingly engaged in an activity described in subsection (c)(2) of section 104 of the Comprehensive Iran 

Sanctions, Accountability, and Divestment Act of 2010 (22 

U.S.C. 8513) or a transaction described in subsection (d)(1) 

of that section; 

(C) knowingly engaged in an activity described in section 

105A(b)(2) of that Act; or 

(D) knowingly conducted any transaction or dealing 

with— 

(i) any person the property and interests in property 

of which are blocked pursuant to Executive Order No. 

13224 (66 Fed. Reg. 49079; relating to blocking property and prohibiting transactions with persons who 

commit, threaten to commit, or support terrorism); 

(ii) any person the property and interests in property of which are blocked pursuant to Executive Order 

No. 13382 (70 Fed. Reg. 38567; relating to blocking of 

property of weapons of mass destruction proliferators 

and their supporters); or 

(iii) any person or entity identified under section 

560.304 of title 31, Code of Federal Regulations (relating to the definition of the Government of Iran) without the specific authorization of a Federal department 

or agency. 

(2) INFORMATION REQUIRED.—If an issuer or an affiliate of 

the issuer has engaged in any activity described in paragraph 

(1), the issuer shall disclose a detailed description of each such 

activity, including— 

(A) the nature and extent of the activity; 

(B) the gross revenues and net profits, if any, attributable to the activity; and 

(C) whether the issuer or the affiliate of the issuer (as 

the case may be) intends to continue the activity. 

(3) NOTICE OF DISCLOSURES.—If an issuer reports under 

paragraph (1) that the issuer or an affiliate of the issuer has 

knowingly engaged in any activity described in that paragraph, 

the issuer shall separately file with the Commission, concurrently with the annual or quarterly report under subsection 

(a), a notice that the disclosure of that activity has been included in that annual or quarterly report that identifies the 

issuer and contains the information required by paragraph (2). 

(4) PUBLIC DISCLOSURE OF INFORMATION.—Upon receiving a 

notice under paragraph (3) that an annual or quarterly report 

includes a disclosure of an activity described in paragraph (1), 

the Commission shall promptly— 

(A) transmit the report to— 

(i) the President; 

(ii) the Committee on Foreign Affairs and the Committee on Financial Services of the House of Representatives; and 

32 

(iii) the Committee on Foreign Relations and the 

Committee on Banking, Housing, and Urban Affairs of 

the Senate; and 

(B) make the information provided in the disclosure and 

the notice available to the public by posting the information on the Internet website of the Commission. 

(5) INVESTIGATIONS.—Upon receiving a report under paragraph (4) that includes a disclosure of an activity described in 

paragraph (1) (other than an activity described in subparagraph (D)(iii) of that paragraph), the President shall— 

(A) initiate an investigation into the possible imposition 

of sanctions under the Iran Sanctions Act of 1996 (Public 

Law 104–172; 50 U.S.C. 1701 note), section 104 or 105A of 

the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, an Executive order specified in 

clause (i) or (ii) of paragraph (1)(D), or any other provision 

of law relating to the imposition of sanctions with respect 

to Iran, as applicable; and 

(B) not later than 180 days after initiating such an investigation, make a determination with respect to whether 

sanctions should be imposed with respect to the issuer or 

the affiliate of the issuer (as the case may be). 

(6) SUNSET.—The provisions of this subsection shall terminate on the date that is 30 days after the date on which the 

President makes the certification described in section 401(a) of 

the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010 (22 U.S.C. 8551(a)). 

* * * * * * * 

DODD-FRANK WALL STREET REFORM AND CONSUMER 

PROTECTION ACT 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘Dodd-Frank 

Wall Street Reform and Consumer Protection Act’’. 

(b) TABLE OF CONTENTS.—The table of contents for this Act is as 

follows: 

Sec. 1. Short title; table of contents. 

* * * * * * * 

TITLE XV—MISCELLANEOUS PROVISIONS 

* * * * * * * 

øSec. 1502. Conflict minerals.¿ 

* * * * * * * 

TITLE XV—MISCELLANEOUS 

PROVISIONS 

* * * * * * * 

øSEC. 1502. CONFLICT MINERALS. 

ø(a) SENSE OF CONGRESS ON EXPLOITATION AND TRADE OF CONFLICT MINERALS ORIGINATING IN THE DEMOCRATIC REPUBLIC OF

33 

THE CONGO.—It is the sense of Congress that the exploitation and 

trade of conflict minerals originating in the Democratic Republic of 

the Congo is helping to finance conflict characterized by extreme 

levels of violence in the eastern Democratic Republic of the Congo, 

particularly sexual- and gender-based violence, and contributing to 

an emergency humanitarian situation therein, warranting the provisions of section 13(p) of the Securities Exchange Act of 1934, as 

added by subsection (b). 

ø(b) DISCLOSURE RELATING TO CONFLICT MINERALS ORIGINATING

IN THE DEMOCRATIC REPUBLIC OF THE CONGO.—Section 13 of the 

Securities Exchange Act of 1934 (15 U.S.C. 78m), as amended by 

this Act, is amended by adding at the end the following new subsection: 

ø‘‘(p) DISCLOSURES RELATING TO CONFLICT MINERALS ORIGINATING IN THE DEMOCRATIC REPUBLIC OF THE CONGO.— 

ø‘‘(1) REGULATIONS.— 

ø‘‘(A) IN GENERAL.—Not later than 270 days after the 

date of the enactment of this subsection, the Commission 

shall promulgate regulations requiring any person described in paragraph (2) to disclose annually, beginning 

with the person’s first full fiscal year that begins after the 

date of promulgation of such regulations, whether conflict 

minerals that are necessary as described in paragraph 

(2)(B), in the year for which such reporting is required, did 

originate in the Democratic Republic of the Congo or an 

adjoining country and, in cases in which such conflict minerals did originate in any such country, submit to the 

Commission a report that includes, with respect to the period covered by the report— 

ø‘‘(i) a description of the measures taken by the person to exercise due diligence on the source and chain 

of custody of such minerals, which measures shall include an independent private sector audit of such report submitted through the Commission that is conducted in accordance with standards established by 

the Comptroller General of the United States, in accordance with rules promulgated by the Commission, 

in consultation with the Secretary of State; and 

ø‘‘(ii) a description of the products manufactured or 

contracted to be manufactured that are not DRC conflict free (‘DRC conflict free’ is defined to mean the 

products that do not contain minerals that directly or 

indirectly finance or benefit armed groups in the 

Democratic Republic of the Congo or an adjoining 

country), the entity that conducted the independent 

private sector audit in accordance with clause (i), the 

facilities used to process the conflict minerals, the 

country of origin of the conflict minerals, and the efforts to determine the mine or location of origin with 

the greatest possible specificity. 

ø‘‘(B) CERTIFICATION.—The person submitting a report 

under subparagraph (A) shall certify the audit described in 

clause (i) of such subparagraph that is included in such report. Such a certified audit shall constitute a critical comVerDate Sep 11 2014 05:52 Feb 21, 2018 Jkt 079006 PO 00000 Frm 00033 Fmt 6659 Sfmt 6601 E:\HR\OC\HR570.XXX HR570
34 

ponent of due diligence in establishing the source and 

chain of custody of such minerals. 

ø‘‘(C) UNRELIABLE DETERMINATION.—If a report required 

to be submitted by a person under subparagraph (A) relies 

on a determination of an independent private sector audit, 

as described under subparagraph (A)(i), or other due diligence processes previously determined by the Commission 

to be unreliable, the report shall not satisfy the requirements of the regulations promulgated under subparagraph 

(A)(i). 

ø‘‘(D) DRC CONFLICT FREE.—For purposes of this paragraph, a product may be labeled as ‘DRC conflict free’ if 

the product does not contain conflict minerals that directly 

or indirectly finance or benefit armed groups in the Democratic Republic of the Congo or an adjoining country. 

ø‘‘(E) INFORMATION AVAILABLE TO THE PUBLIC.—Each 

person described under paragraph (2) shall make available 

to the public on the Internet website of such person the information disclosed by such person under subparagraph 

(A). 

ø‘‘(2) PERSON DESCRIBED.—A person is described in this paragraph if— 

ø‘‘(A) the person is required to file reports with the Commission pursuant to paragraph (1)(A); and 

ø‘‘(B) conflict minerals are necessary to the functionality 

or production of a product manufactured by such person. 

ø‘‘(3) REVISIONS AND WAIVERS.—The Commission shall revise 

or temporarily waive the requirements described in paragraph 

(1) if the President transmits to the Commission a determination that— 

ø‘‘(A) such revision or waiver is in the national security 

interest of the United States and the President includes 

the reasons therefor; and 

ø‘‘(B) establishes a date, not later than 2 years after the 

initial publication of such exemption, on which such exemption shall expire. 

ø‘‘(4) TERMINATION OF DISCLOSURE REQUIREMENTS.—The requirements of paragraph (1) shall terminate on the date on 

which the President determines and certifies to the appropriate 

congressional committees, but in no case earlier than the date 

that is one day after the end of the 5-year period beginning on 

the date of the enactment of this subsection, that no armed 

groups continue to be directly involved and benefitting from 

commercial activity involving conflict minerals. 

ø‘‘(5) DEFINITIONS.—For purposes of this subsection, the 

terms ‘adjoining country’, ‘appropriate congressional committees’, ‘armed group’, and ‘conflict mineral’ have the meaning 

given those terms under section 1502 of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act.’’. 

ø(c) STRATEGY AND MAP TO ADDRESS LINKAGES BETWEEN CON- FLICT MINERALS AND ARMED GROUPS.— ø(1) STRATEGY.— ø(A) IN GENERAL.—Not later than 180 days after the 

date of the enactment of this Act, the Secretary of State, 

in consultation with the Administrator of the United 

35 

States Agency for International Development, shall submit 

to the appropriate congressional committees a strategy to 

address the linkages between human rights abuses, armed 

groups, mining of conflict minerals, and commercial products. 

ø(B) CONTENTS.—The strategy required by subparagraph 

(A) shall include the following: 

ø(i) A plan to promote peace and security in the 

Democratic Republic of the Congo by supporting efforts of the Government of the Democratic Republic of 

the Congo, including the Ministry of Mines and other 

relevant agencies, adjoining countries, and the international community, in particular the United Nations 

Group of Experts on the Democratic Republic of 

Congo, to— 

ø(I) monitor and stop commercial activities involving the natural resources of the Democratic 

Republic of the Congo that contribute to the activities of armed groups and human rights violations in the Democratic Republic of the Congo; 

and 

ø(II) develop stronger governance and economic 

institutions that can facilitate and improve transparency in the cross-border trade involving the 

natural resources of the Democratic Republic of 

the Congo to reduce exploitation by armed groups 

and promote local and regional development. 

ø(ii) A plan to provide guidance to commercial entities seeking to exercise due diligence on and formalize 

the origin and chain of custody of conflict minerals 

used in their products and on their suppliers to ensure 

that conflict minerals used in the products of such 

suppliers do not directly or indirectly finance armed 

conflict or result in labor or human rights violations. 

ø(iii) A description of punitive measures that could 

be taken against individuals or entities whose commercial activities are supporting armed groups and 

human rights violations in the Democratic Republic of 

the Congo. 

ø(2) MAP.— 

ø(A) IN GENERAL.—Not later than 180 days after the 

date of the enactment of this Act, the Secretary of State 

shall, in accordance with the recommendation of the 

United Nations Group of Experts on the Democratic Republic of the Congo in their December 2008 report— 

ø(i) produce a map of mineral-rich zones, trade 

routes, and areas under the control of armed groups in 

the Democratic Republic of the Congo and adjoining 

countries based on data from multiple sources, including— 

ø(I) the United Nations Group of Experts on the 

Democratic Republic of the Congo; 

ø(II) the Government of the Democratic Republic of the Congo, the governments of adjoining 

36 

countries, and the governments of other Member 

States of the United Nations; and 

ø(III) local and international nongovernmental 

organizations; 

ø(ii) make such map available to the public; and 

ø(iii) provide to the appropriate congressional committees an explanatory note describing the sources of 

information from which such map is based and the 

identification, where possible, of the armed groups or 

other forces in control of the mines depicted. 

ø(B) DESIGNATION.—The map required under subparagraph (A) shall be known as the ‘‘Conflict Minerals Map’’, 

and mines located in areas under the control of armed 

groups in the Democratic Republic of the Congo and adjoining countries, as depicted on such Conflict Minerals 

Map, shall be known as ‘‘Conflict Zone Mines’’. 

ø(C) UPDATES.—The Secretary of State shall update the 

map required under subparagraph (A) not less frequently 

than once every 180 days until the date on which the disclosure requirements under paragraph (1) of section 13(p) 

of the Securities Exchange Act of 1934, as added by subsection (b), terminate in accordance with the provisions of 

paragraph (4) of such section 13(p). 

ø(D) PUBLICATION IN FEDERAL REGISTER.—The Secretary 

of State shall add minerals to the list of minerals in the 

definition of conflict minerals under section 1502, as appropriate. The Secretary shall publish in the Federal Register notice of intent to declare a mineral as a conflict mineral included in such definition not later than one year before such declaration. 

ø(d) REPORTS.— 

ø(1) BASELINE REPORT.—Not later than 1 year after the date 

of the enactment of this Act and annually thereafter through 

2020, in 2022, and in 2024, the Comptroller General of the 

United States shall submit to appropriate congressional committees a report that includes an assessment of the rate of 

sexual- and gender-based violence in war-torn areas of the 

Democratic Republic of the Congo and adjoining countries. 

ø(2) REGULAR REPORT ON EFFECTIVENESS.—Not later than 2 

years after the date of the enactment of this Act and annually 

thereafter through 2020, in 2022, and in 2024, the Comptroller 

General of the United States shall submit to the appropriate 

congressional committees a report that includes the following: 

ø(A) An assessment of the effectiveness of section 13(p) 

of the Securities Exchange Act of 1934, as added by subsection (b), in promoting peace and security in the Democratic Republic of the Congo and adjoining countries. 

ø(B) A description of issues encountered by the Securities and Exchange Commission in carrying out the provisions of such section 13(p). 

ø(C)(i) A general review of persons described in clause 

(ii) and whether information is publicly available about— 

ø(I) the use of conflict minerals by such persons; 

and 

37 

ø(II) whether such conflict minerals originate 

from the Democratic Republic of the Congo or an 

adjoining country. 

ø(ii) A person is described in this clause if— 

ø(I) the person is not required to file reports 

with the Securities and Exchange Commission 

pursuant to section 13(p)(1)(A) of the Securities 

Exchange Act of 1934, as added by subsection (b); 

and 

ø(II) conflict minerals are necessary to the 

functionality or production of a product manufactured by such person. 

ø(3) REPORT ON PRIVATE SECTOR AUDITING.—Not later than 

30 months after the date of the enactment of this Act, and annually thereafter, the Secretary of Commerce shall submit to 

the appropriate congressional committees a report that includes the following: 

ø(A) An assessment of the accuracy of the independent 

private sector audits and other due diligence processes described under section 13(p) of the Securities Exchange Act 

of 1934. 

ø(B) Recommendations for the processes used to carry 

out such audits, including ways to— 

ø(i) improve the accuracy of such audits; and 

ø(ii) establish standards of best practices. 

ø(C) A listing of all known conflict mineral processing facilities worldwide. 

ø(e) DEFINITIONS.—For purposes of this section: 

ø(1) ADJOINING COUNTRY.—The term ‘‘adjoining country’’, 

with respect to the Democratic Republic of the Congo, means 

a country that shares an internationally recognized border 

with the Democratic Republic of the Congo. 

ø(2) APPROPRIATE CONGRESSIONAL COMMITTEES.—The term 

‘‘appropriate congressional committees’’ means— 

ø(A) the Committee on Appropriations, the Committee 

on Foreign Affairs, the Committee on Ways and Means, 

and the Committee on Financial Services of the House of 

Representatives; and 

ø(B) the Committee on Appropriations, the Committee 

on Foreign Relations, the Committee on Finance, and the 

Committee on Banking, Housing, and Urban Affairs of the 

Senate. 

ø(3) ARMED GROUP.—The term ‘‘armed group’’ means an 

armed group that is identified as perpetrators of serious 

human rights abuses in the annual Country Reports on 

Human Rights Practices under sections 116(d) and 502B(b) of 

the Foreign Assistance Act of 1961 (22 U.S.C. 2151n(d) and 

2304(b)) relating to the Democratic Republic of the Congo or an 

adjoining country. 

ø(4) CONFLICT MINERAL.—The term ‘‘conflict mineral’’ 

means— 

ø(A) columbite-tantalite (coltan), cassiterite, gold, wolframite, or their derivatives; or 

38 

ø(B) any other mineral or its derivatives determined by 

the Secretary of State to be financing conflict in the Democratic Republic of the Congo or an adjoining country. 

ø(5) UNDER THE CONTROL OF ARMED GROUPS.—The term 

‘‘under the control of armed groups’’ means areas within the 

Democratic Republic of the Congo or adjoining countries in 

which armed groups— 

ø(A) physically control mines or force labor of civilians to 

mine, transport, or sell conflict minerals; 

ø(B) tax, extort, or control any part of trade routes for 

conflict minerals, including the entire trade route from a 

Conflict Zone Mine to the point of export from the Democratic Republic of the Congo or an adjoining country; or 

ø(C) tax, extort, or control trading facilities, in whole or 

in part, including the point of export from the Democratic 

Republic of the Congo or an adjoining country.¿ 

* * * * * * * 

(39) 

MINORITY VIEWS 

For decades, the exploitation and trade in conflict minerals in the 

Democratic Republic of the Congo (‘‘DRC’’) by armed groups and 

military units has helped finance conflict in eastern DRC that is 

characterized by extreme levels of violence, mass killings, and horrific sexual violence, including rape, mutilation, and sexual slavery. 

Recognizing that breaking the link between armed groups and illegal mining profits was essential to broader reform efforts in the 

DRC, in 2010, Congress adopted Section 1502 of the Dodd Frank 

Wall Street Reform and Consumer Protection Act (Dodd-Frank) in 

order to help disrupt a major source of revenue for the armed 

groups and military units responsible for such atrocities. 

Section 1502 requires companies listed on U.S. exchanges that 

use ‘‘conflict minerals’’’ (tin, tungsten, tantalum, and gold) from the 

DRC and its nine neighboring countries to carry out checks on 

their supply chains—known as due diligence— to determine if their 

purchases are fueling conflict in the DRC, and to publicly report 

their findings. 

Despite repeated Republican efforts to weaken and eliminate the 

conflict minerals rule, Section 1502 has been sustained by evidence 

showing that the rule is having a demonstrative, positive impact on 

the ground. 

In October 2011, the Coordinator of the U.N. Group of Experts 

on the DRC wrote to the Securities and Exchange Commission 

(SEC) to discuss the findings of the U.N. Group of Experts over the 

previous year. He stated that Section 1502 ‘‘has had a massive and 

welcome impact so far, requiring chain participants all over the 

world to take due diligence and conflict financing seriously. This 

should not and must not be thrown away or weakened.’’ Commenting on the effectiveness of due diligence efforts, the letter concludes, ‘‘Retreat now will confuse all players in the market, unfairly and unwisely diminishing the efforts of those who are implementing due diligence, and playing into the hands of the cynical 

and those with other agendas who have thus far refused to implement due diligence in the hope that it will simply go away.’’ 

Indeed, the Conflict Mineral Rule in Section 1502 has spurred intense efforts to operationalize and expand regional, national, and 

industry due diligence systems. For example, a regional mineral 

certification system and mining validation program run by the 

International Conference on the Great Lakes Region—the regional 

body comprising twelve African states, including the DRC—has 

validated 420 mines as conflict-free in the eastern DRC as of April 

2017. Also, private sector-led responsible sourcing programs are expanding, such as the ‘‘bag and tag’’ traceability and due diligence 

program run by the International Tin Supply Chain Initiative— 

which expanded its coverage of mining sites in eastern DRC, with 

40 

496 active sites covered in the first quarter of 2017 compared with 

322 in December 2015. 

Understandably, many businesses have seen the benefits of the 

Conflict Minerals Rule. KEMET electronics, a leading global supplier of electronics components, cited Section 1502 and the corresponding SEC Rule as a reason for its decision to invest in the 

DRC and the surrounding region. In his November 2015 testimony 

before the Subcommittee on Monetary Policy and Trade, KEMET’s 

CEO said, ‘‘The Dodd-Frank Act has certainly helped companies 

like KEMET to again, after decades of absence, be able to embrace 

the DRC, allowing us to develop a competitive and secure supply 

chain, improving both our competitiveness and the life of the people in the village.’’ 

Moreover, despite repeated industry claims that implementation 

costs would be prohibitive, company compliance over the past three 

years paints a different picture. The cost of conflict minerals reporting requirements have been substantially lower than expected—in fact, up to 75% less than the initial SEC estimate, in 

part because innovative tools and processes have been developed 

that streamline compliance, many of which have been made available to issuers and suppliers at no cost. 

Increased scrutiny of certain mines and mineral trading routes 

has created opportunities for transparent and conflict-free sourcing 

from eastern DRC, and in some areas, conflict-free mining is now 

happening in large volume. For example, the North Kivu province, 

the most conflict-mineral-rich province in the DRC, reported 

record-high conflict-free export numbers for both tin and tantalum 

in 2016. 

In its May 2016 report, the UN Group of Experts on the DRC 

noted that ‘‘the traceability system for tin, tantalum and tungsten 

is becoming increasingly embedded in the country’s mining governance.’’ Together, these efforts have opened up opportunities for 

‘conflict-free’ trading from the DRC and have helped ensure that 

U.S. and other international companies buy minerals from the region in a responsible way. 

Repealing 1502 now would only serve to fuel the conflict in and 

around the DRC by emboldening warlords, increasing the rate of 

violence and rape throughout the region, and further destabilize 

Central African countries. In a March 13, 2017 letter to the SEC, 

the Congolese Minister of Mines expressed the concern of the DRC 

government that repealing Section 1502 of Dodd-Frank would entail ‘‘a high probability of re-emerging risks that will jeopardize the 

DRC stability, and, in turn, the U.S. security interests,’’ including 

the risk of an upsurge in the activities of non-State armed groups, 

as well as a weakening of policies that promote good business practices of responsible mineral sourcing. 

In February 2017, the International Conference of the Great 

Lakes Region—a conference of 12 member states from Sub-Saharan 

Africa—released a statement warning that a repeal of section 1502 

of Dodd-Frank would contribute to a surge in unrest, including a 

‘‘generalized proliferation of terrorist groups, trans-boundary 

money laundering and illicit financial flows’’ in the region. 

As part of a broader regional and international effort, a responsible minerals trade will help lay a sustainable foundation for 

41 

greater security and economic opportunity in the DRC region. We 

believe it is a serious mistake to give up on efforts that are already 

showing positive impacts and revert to a brutal status quo ante. 

For these reasons we strongly oppose H.R. 4248. 

MAXINE WATERS. 

MICHAEL E. CAPUANO. 

VICENTE GONZALEZ. 

DANIEL T. KILDEE. 

STEPHEN F. LYNCH. 

NYDIA M. VELA ́ ZQUEZ. 

JOYCE BEATTY. 

CAROLYN B. MALONEY. 

KEITH ELLISON. 

AL GREEN. 

WM. LACY CLAY. 

RUBEN J. KIHUEN. 

Æ