The third part of this series on the Dodd-Frank Act is the most unusual because, at first, it seems to have nothing to do with finance at all. Instead it comes down to a trial about the First Amendment in 2015. Let’s give some background:

Coltan is short for Columbite-tantalite – a black tar-like mineral found in major quantities in the Congo. The Congo possesses 64 percent of the world’s coltan. When coltan is refined it becomes a heat resistant powder that can hold a high electric charge. The properties of refined coltan is a vital element in creating devices that store energy or capacitors, which are used in everything from the smart phone you may be using to read this to the laptop I am using to write it.

Many people know about the child soldiers, massacres, slavery, and weaponization of sexual violence on a mass scale that has happened in the Democratic Republic of the Congo, and some even know about the militias from Rwanda, Uganda, and Burundi who regularly pillage the region. But too few know about the US corporations involved in this conflict, particularly to get their hands on coltan. Cabot Corporation in Boston, MA; OM Group in Cleveland, Ohio; AVX in Myrtle Beach, SC; Eagle Wings Resources International and Trinitech International in Ohio; Kemet Electronics Corporation in Greenville, SC;  Vishay Sprague in Malvern, PA are just a few of the companies and they earn a total of about $9.42 billion a year. The DRC at the height of international attention received $5.3 billion in aid total, from both governments and private donors, and while I couldn’t find how much the US government contributed in particular it was certainly a number much lower than $9.42 billion. CEO Per-Olof Lööf of Kemet brought home $2.37 million for himself in 2015 alone.

Speaking of 2011, a provision tucked into the Dodd-Frank Act presented the Securities and Exchange Commission with a task – to create a rule that would bring some transparency to the use of “conflict minerals” like the coltan from the Congo by these multi-billion dollar corporations. They had proposed a rule in December of 2010 and opened it up for comment. The S.E.C. received thousands of comments and letters on the rule, including from the author of this blog, and in 2012, by a vote of 3-2, passed a final rule.

The rule was fairly straightforward: (1) a firm decides if the rule applies to it by evaluating if they meet a de minimis standard of their direct or contracted involvement in the manufacturing of products with conflict minerals (2) if the firm is dealing with conflict minerals, they must conduct a reasonable investigation into the mineral’s country of origin – while it might seem silly that a corporation would have to investigate its own supply chain, it is common particularly through the militias in the neighboring countries to try to pass of Congolese coltan as being from another country (3) they then submit their findings and are classified as either conflict-free, conflict minerals, or “DRC conflict undeterminable.” They then must post this classification on their website.

Enter white knights of corporate America and Randian heartthrobs National Association of Manufacturers. While the American Legislative Exchange Council is more infamous for basically running 50% of state governments across the country, NAM fights in the trenches for the right of the wealthiest to avoid accountability for their exploitation and violence. Founded in 1895, they represent over 14,000 companies involved in manufacturing and spend most of their time going after any and all regulations on trade and workplaces as well as taxes.  Most of the SEC rule did not scare them – after all, these companies had money to spare, and a clever PR person could easily turn that mandatory investigation into an example of the company “giving back.” But what did scare them was the last part – posting the classification on the companies’ websites. Capitalism needs alienation in order to function. If consumers saw upfront a concrete connection, a visible reminder of the human cost of their purchase, it could seriously harm the companies’ bottom lines.

The representation of private interests … abolishes all natural and spiritual distinctions by enthroning in their stead the immoral, irrational and soulless abstraction of a particular material object and a particular consciousness which is slavishly subordinated to this object.

Marx, On the Thefts of Wood, in Rheinische Zeitung (1842)

And so, nightmares of only making annual revenues of hundreds of millions in their heads, NAM sued the SEC for violating the First Amendment.

 It’s true Elsa: corporate First Amendment rights are not just about campaign donations. Now I don’t want to get too in the weeds with First Amendment jurisprudence, mostly because it is very complicated and a subject that I am not super familiar with. But basically the SEC argued that the court’s review of whether compelling the label violated the companies’ free speech should use a “rational basis standard” because it was a factual disclosure rather than an opinion. This standard for review of corporate speech is meant to protect consumers by giving the government the power to, quite literally, force the truth when it deems necessary. There are two other standards: strict scrutiny and intermediate scrutiny, or the Central Hudson test. The Central Hudson test is as follows: the government must show (1) a substantial government interest that is; (2) directly and materially advanced by the restriction; and (3) that the restriction is narrowly tailored. When the case got the DC Circuit Court of Appeals, the Court decided to apply the Central Hudson test since the classification did not seem to be one for the purpose of protecting consumers. As such they ruled against the SEC, stating that the Commission had failed to demonstrate that alternatives (like the Commission publishing a database or list) would not have advanced the interest as well or even better. Amnesty International, intervenor in the case, and the SEC sought and were granted a rehearing.

The rehearing was granted in large part because of a holding in the case of American Meat Institute v. U.S. Dept. of Agriculture in 2014. The DC Circuit ruled that the government did have a consumer protection interest in companies stating the origin of their products, and thus that the rational basis standard applied. It should come as no surprise that the DC Circuit Court of Appeals reacted to shut insolence by exhaustively shutting down a broader application of the rational basis standard. But the opinion did seem to worry them that a question or one similar to it might wind up at the Supreme Court and that their own opinion could get overturned, so they laid out another way in which it was a violation of free speech – conjecture. Governmental interests in compelling speech cannot be based in a conjecture of their effectiveness, and the Court reasoned that the SEC had no way of knowing whether this transparency or even a boycott resulting from it would decrease violence in the region by cutting off revenue to the various militias. In a poetic moment of irony, the court ruled the invisible hand of the market was too much a conjecture, and thus that the SEC even by rational basis had violated the First Amendment rights of corporations.

One judge did not agree. Would-be Justice nominee if not for Judge Garland Judge Srinivasan wrote a dissent:

The sum of the matter is this: in the context of commercial speech, the compelled disclosure of truthful, factual information about a product to consumers draws favorable review. That review takes the form of the permissive standard laid down by the Supreme Court in Zauderer. I would apply that approach here. Like the mine-run of uncontroversial requirements to disclose factual information to consumers in the commercial sphere, the descriptive phrase “not been found to be ‘DRC conflict free’ ” communicates truthful, factual information about a product to investors and consumers: it tells them that a product has not been found to be free of minerals originating in the DRC or adjoining countries that may finance armed groups.

Judge Srinivasan saw through the crocodile tears of NAM over infringement on their free speech. What this case had always been about was whether or not people would get “truthful, factual information” about products made with conflict minerals. But unfortunately he stood alone. There’s no happy ending to this story. Earlier this month, sixteen villagers were hacked to death with machetes and axes in the Eastern Congo. You didn’t hear about it and the news didn’t report it. That is NAM’s victory for free speech. And the connection to finance? It’s everywhere. Aside from gold now being the most profitable conflict mineral coming out of the Congo, the coltan-fueled digital age is what brought finance to previously unimaginable heights. Sure, they also invest heavily in all the aforementioned mining and manufacturing companies, but technology like the Bloomberg terminals and micro-second trading software are the major weapons finance deployed to steal wealth from the rest of the world. Just remember that the next time a new coltan-powered gadget comes out that you covet; after all, the corporations are under no obligation to remind you.

You can support my work through a $1 or $5 donation, and can learn more about the struggle of the Congolese people and the #Telema movement here.

Click here for Part One of the Dodd-Frank series and here for Part Two.