18.05.12 MACCS Oxfam America files lawsuit against the Securities and Exchange Commission

Oxfam America has filed a lawsuit against the Securities and Exchange Commission (SEC) for illicitly delaying the issuance of a Final Rule, implementing a provision of the Dodd-Frank Act that requires disclosure of payments from oil, gas and mining companies to the US and foreign governments.

Known as Section 1504 or the Cardin-Lugar provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act, this provision discloses information to investors in resource rich countries thereby helping curb corruption and encouraging accountability for the funds gained from the oil, gas and mining sector.

The Congress set a deadline of 17 April 2011 for the SEC's disclosure of the Final Rule that is needed to bring Section 1504 into effect, which the SEC has missed. Subsequently, Oxfam America notified the SEC on 16 April 2012 that it would file suit if the regulatory agency did not issue a Final Rule within 30 days.

The international relief and development organisation's lawsuit states that “the extractive payment disclosures that Congress mandated nearly two years ago will not take place unless and until the SEC issues a Final Rule. Unfortunately, the SEC's pattern of delay gives no assurance that it will ever promulgate a Final rule without the involvement of this Court”. The SEC issued a proposed rule on 15 December 2010.

The legal action follows engagement by Oxfam America and allies in the Publish What You Pay coalition with the SEC since the Dodd-Frank Act was signed into law. Speaking about it senior policy manager of Oxfam America's oil, gas and mining program Ian Gary said: “We have been patient, but the Commission's continued failure to issue a Final Rule implementing Cardin-Lugar frustrates Congress's intent to increase transparency in resource-rich countries…For those living in poverty in resource-rich countries, there's no time left to wait.”

He added: “Oxfam America is simply asking for the SEC to follow the law.”

A number of investors representing more than $1.2 trillion worth of assets under management have made submissions to the SEC in support of the provision. US Secretary of State Hillary Clinton has called on the SEC to “go as far as possible”. Additionally, several prominent members of the Senate and House of Representatives have called on the SEC to respect the statutory deadline and Congressional intent.

Gary noted further: “One of the reasons for the financial crisis was a lack of public information about the real risks of investments…In the case of the oil and mining industries, investors have a right to know how and whether companies are exposed to political and expropriation risks in volatile resource-rich countries.”

The lawsuit, filed in the US District Court for the District of Massachusetts, asks the court to order the SEC to issue a Final Rule as required by Section 1504.

Sources: Oxfam America, Reuters