On December 23, 2010, SEC published proposed rules (75 FR 246) to amend its annual reporting requirements found at 17 CFR Part 229 and 249. Specifically, the proposed rules would require any issuer for which conflict minerals are necessary to the functionality or production of a product manufactured, or contracted to be manufactured, by that issuer to disclose in the body of its annual report whether its conflict minerals originated in the Democratic Republic of the Congo or an adjoining country.

The conflict minerals covered by this rule proposal are cassiterite, columbite-tantalite, gold, wolframite or their derivatives.These minerals are essential to many products - from jewelry to cell phones to jet engines. If the conflict minerals did originate in this region of the world, that issuer would be required to furnish a separate report as an exhibit to its annual report that includes a description of the measures taken by the issuer to exercise due diligence on the source and chain of custody of its conflict minerals.

These due diligence measures would include, but would not be limited to, an independent private sector audit of the issuer's report conducted in accordance with standards established by the Comptroller General of the United States. The issuer would be required to certify in this separate report that it had obtained an independent private sector audit of its report, provide a copy of the audit report, and make its reports available to the public on its public website. Comments on these proposed rules are due on March 2, 2011.

A copy of these proposed rules can be found at http://www.sec.gov/news/press/2010/2010-245.htm.