December 15, 2024
The court ruled that the SEC did not have jurisdiction to approve Nasdaq’s board diversity requirements.
The 5th Circuit Court of Appeals, a Republican-dominated appeals court, ruled on Dec. 11 that the Securities and Exchange Commission does not have the authority to enact rules requiring Nasdaq trading companies to have at least one woman, person of color or LGBTQ+ member boards or explain why they don’t.
The lawsuit was filed by the National Center for Public Policy Research, a conservative think tank, and the Alliance for Fair Board Recruitment, an organization led by anti-affirmative action activist Edward Bloom, according to: USA Today. The conservative groups argued that boardroom diversity requirements violate civil rights laws and promote racial and gender discrimination.
While Nasdaq said it would not seek further review, it also stood by its rules in a statement. USA Today.
“We argue that the rule has simplified and standardized disclosure requirements to the benefit of both corporates and investors.”
A group of 22 attorneys general said in a joint letter that they are investigating whether Nasdaq violated anti-discrimination laws.
“Given Nasdaq’s eagerness to impose quotas on companies, some of which are headquartered in our states, we are interested in knowing what policies Nasdaq has in place to ensure that its listed companies comply with federal and state anti-discrimination laws.” , – they wrote.
While a wave of DEI initiatives and proclamations began in 2020 following the police deaths of George Floyd and Breonna Taylor, those initiatives have been pushed back in recent years, despite significant disparity at Corporate America’s board meetings.
Business leaders like JP Morgan Chase’s Jaime Dimon have repeatedly said that diversity is good for business.
In 2021, a three-judge panel ruled that Nasdaq’s rules fell within the SEC’s jurisdiction.However, in the last full review of a complaint filed by conservative groups, the conservative judges overturned the earlier decision.
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