by Katelynn Richardson
A federal appeals court rejected challenges Wednesday to a Nasdaq rule mandating that companies listed on the exchange have a female and an underrepresented minority on their board, or explain why they cannot meet the requirement.
The Fifth Circuit Court of Appeals shot down lawsuits filed by the National Center for Public Policy Research and the Alliance for Fair Board Recruitment against the Securities and Exchange Commission (SEC) for approving the rule in August 2021. The rule requires Nasdaq-listed companies to provide information on gender, racial and LGBTQ+ status of their board of directors, mandating that at least two board members fall into one of those “diverse” categories.
“This organization is disappointed by the Court’s decision in this case, and we will continue the fight to eliminate race discrimination in corporate America,” Edward Blum, who formed the Alliance for Fair Board Recruitment and was behind the Supreme Court cases that overturned affirmative action, told the Daily Caller News Foundation. “An appeal to a higher court will be filed shortly.”
The three-judge panel that backed the rule was composed entirely of Democrat-appointed judges: Stephen Higginson, an Obama appointee; Carl Stewart, a Clinton appointee; and James Dennis, a Clinton appointee. The groups could now seek an en banc rehearing before the full Fifth Circuit or appeal to the Supreme Court.
Twelve of the 16 judges on the Fifth Circuit have been appointed by Republican presidents, with six appointed by former President Donald Trump. A number of the appeals court’s recent rulings — including in the Missouri v. Biden censorship case and the abortion pills case — have opposed Biden administration policies.
“We are pleased that the U.S. Court of Appeals for the Fifth Circuit has upheld the U.S. Securities and Exchange Commission’s (SEC) approval of Nasdaq’s rule to enhance board diversity disclosures through a market-led solution,” a Nasdaq spokesperson said in a statement provided to the DCNF. “We look forward to working with our companies in continuing to implement this listing standard for corporate governance.”
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Katelynn Richardson is a reporter at Daily Caller News Foundation.
