{"id":1507542,"date":"2024-12-12T14:25:00","date_gmt":"2024-12-12T19:25:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1507542"},"modified":"2024-12-12T14:25:00","modified_gmt":"2024-12-12T19:25:00","slug":"us-appeals-court-vacates-nasdaq-board-diversity-rule","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/us-appeals-court-vacates-nasdaq-board-diversity-rule\/1507542\/","title":{"rendered":"US Appeals Court Vacates Nasdaq Board Diversity Rule"},"content":{"rendered":"

US Appeals Court Vacates Nasdaq Board Diversity Rule<\/span><\/p>\n

\n

Authored by Katabella Roberts via The Epoch Times,<\/em><\/a><\/p>\n

A U.S. appeals court on Dec. 11 struck down a Nasdaq rule requiring companies listed on the stock exchange to have \u201cdiverse representation\u201d on their boards,<\/strong> finding the Securities and Exchange Commission (SEC) acted unlawfully in approving the policy.<\/p>\n

<\/a><\/p>\n

The rule was introduced<\/a> by the SEC and Nasdaq as part of efforts to boost racial and gender diversity in corporations. They say it is a disclosure requirement that provides standardized information on board diversity.<\/p>\n

In a 9\u20138 ruling<\/a>, the New Orleans-based Fifth U.S. Circuit Court of Appeals found the rule should not have been signed off by the SEC in August 2021 because the regulator lacked legal authority.<\/p>\n

\u201cSEC has intruded into territory far outside its ordinary domain,\u201d<\/strong><\/em> U.S. Circuit Judge Andrew Oldham wrote for the majority.<\/p>\n

According to the rule, companies listed on the exchange must have at least two \u201cdiverse board members,\u201d including \u201cat least one director who self-identifies as a female,\u201d and at least one who \u201cself-identifies as Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, two or more races or ethnicities, or as LGBTQ+.\u201d<\/strong><\/p>\n

Companies that do not have at least two such members on their board of directors must explain why they do not. They must also disclose annually how board members identify in those categories.<\/p>\n

The National Center for Public Policy Research and the Alliance for Fair Board Recruitment, a group formed by conservative legal activist Edward Blum, filed a lawsuit against the rule in August 2021.<\/p>\n

They argued<\/a> the rule amounted to an attempt to coerce companies into satisfying a \u201cdiversity quota,\u201d was unconstitutional, and violated the Exchange Act, the Administrative Procedure Act, and free speech.<\/p>\n

\u201cNasdaq\u2019s discriminate-or-explain command is unlawful because it fails to advance any legitimate exchange purpose,\u201d<\/strong><\/em> the plaintiffs wrote in their lawsuit.<\/p>\n

The rule, plaintiffs said, is designed to promote board diversity as opposed to preventing\u00a0fraud or further any other legitimate purpose under the Exchange Act.<\/p>\n

\u201cEven if Nasdaq\u2019s diversity rule were legally permissible and supported by substantial evidence (and it is not), it is not permissible under the U.S. Constitution,\u201d <\/strong><\/em>they argued.<\/p>\n

Plaintiffs pointed to the U.S. Constitution\u2019s Fifth Amendment, which prohibits federal discrimination based on sex, race, or sexual orientation except in very narrow circumstances.<\/p>\n

\u201cTo approve the proposed discrimination, the SEC would have to conclude that Nasdaq\u2019s rule survives the exacting scrutiny needed to justify the discriminatory treatment of individuals based on their sex, race, or sexual orientation,\u201d<\/strong><\/em> they wrote.<\/p>\n

A three-judge panel of the Fifth Circuit in October 2023 struck down<\/a> the lawsuits challenging the Nasdaq rule, saying the SEC acted within its authority. However, the appeals court opted to have all of its judges reconsider the matter.<\/p>\n

In Wednesday\u2019s ruling, Oldham said the SEC\u2019s rule was \u201cfar removed\u201d from the 1934 Securities Exchange Act, which governs stock trading and dictates<\/a> that stock exchange rules approved by the regulator must promote \u201cjust and equitable principles of trade.\u201d<\/p>\n

\u201cWe are not aware of any established rule or custom of the securities trade that saddles companies with an obligation to explain why their boards of directors do not have as much racial, gender, or sexual orientation diversity as Nasdaq would prefer,\u201d Oldham wrote.<\/em><\/p>\n

Eight judges dissented, including U.S. Circuit Judge Stephen Higginson, who stated that the SEC\u2019s limited role in reviewing Nasdaq\u2019s proposed rules precluded it from making a different decision.<\/strong><\/p>\n

In a statement to multiple media outlets after the ruling, a Nasdaq spokesperson said<\/a>, \u201cWe maintain that the rule simplified and standardized disclosure requirements to the benefit of both corporates and investors.\u201d<\/p>\n

Separately, Mark Chenoweth, president of the New Civil Liberties Alliance, which represented the National Center for Public Policy Research, said<\/a> the court\u2019s ruling \u201cshould chasten SEC to stick to its knitting and stop trying to abuse its market-regulating power.\u201d<\/strong><\/p>\n

The Epoch Times contacted Nasdaq for further comment but received no reply by publication time.<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nThu, 12\/12\/2024 – 09:25<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/political\/us-appeals-court-vacates-nasdaq-board-diversity-rule<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

US Appeals Court Vacates Nasdaq Board Diversity Rule Authored by Katabella Roberts via The Epoch Times, A U.S. appeals court on Dec. 11 struck down…<\/p>\n","protected":false},"author":0,"featured_media":1507543,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-1507542","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","wpcat-1-id"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/pbimBl-6kbc","jetpack_featured_media_url":"https:\/\/bugaluu.com\/news\/wp-content\/uploads\/sites\/3\/2024\/12\/nasdaq-diversity-7sQYPe.jpeg","_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1507542","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1507542"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1507542\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media\/1507543"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1507542"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1507542"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1507542"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}