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House votes to defund enforcement of SEC's pay ratio, conflict minerals rules

Joe Mont | July 8, 2016

Another attack on the Securities and Exchange Commission’s conflict minerals rule is underway in the halls of Congress, as is a bid to weaken the agency’s controversial pay ratio rule.

On July 7, while voting on a financial services appropriations bill, the House of Representatives passed an amendment introduced by Rep. Bill Huizenga (R-Mich.) that specifies, “no funds appropriated in this Act may be used to enforce a SEC rule pursuant to Section 1502 of Dodd-Frank relating to conflict minerals.” The Dodd-Frank Act mandated the SEC to develop rules for the disclosure of certain materials mined in the Democratic Republic of the Congo that fund violent militia groups.

Activists in support of the rule are, as expected, not pleased. “Defunding this provision would undermine years of progress that has been made by companies, private sector initiatives, and regional governments to support conflict-free minerals sourcing from Congo,” a statement by the Enough Project, a self-described “atrocity prevention policy group,” says.

“The defunding of section 1502 in [the] bill is an attempt to halt momentum toward corporate transparency and responsible sourcing,” says Holly Dranginis, senior policy analyst at the Enough Project. “It ignores real progress in eastern Congo, where people once beset by brutal violence have said their lives are safer since 1502 and related reforms have come to be. This fight is not over. The Senate should send a clear message that corporate executives cannot turn a blind eye to where their minerals come from by voting no on this amendment.”

Another amendment similarly seeks to defund another Dodd-Frank requirement, a rule requiring public companies to disclose, on an annual basis, a ratio comparing CEO pay to that of a mathematically determined median employee. “None of the funds made available by this Act may be used the SEC to finalize, implement, administer, or enforce pay ratio disclosure rules, including the final rule titled ‘Pay Ratio Disclosure,’ published Aug. 18, 2015,” it says.