Nasdaq’s Diversity Rules for Company Boards Are Rejected by a US Appeals Court

(VOR News) – The Louisiana appeals court concluded that corporations listed on Nasdaq cannot be forced to establish diverse boards of directors. This ruling was rendered in line with the court opinion.

More than three years after the Securities and Exchange Commission approved Nasdaq’s strategy to increase the number of women, members of ethnic minorities, and LGBTQ people serving on corporate boards in the United States, the ruling has been decided upon. The plan is to raise the population of people who satisfy the requirements for corporate board membership.

The suggested policy, which was meant to be the first of its kind for a securities exchange in the United States, would have mandated that most of the almost 3,000 Nasdaq companies would have had to have at least one woman on their board of directors in addition to one person identifying as gay, lesbian, bisexual, transgender, or queer. Most businesses would have had this need present throughout their operations.

Furthermore, Nasdaq would require businesses to disclose board demographics.

Arguing that the regulations are not only arbitrary but also time-consuming, some conservative groups and Republican senators have expressed their strong rejection to the idea. They have maintained that the regulations reflect both these aspects.

Wednesday was the day the Fifth United States Circuit Court of Appeals in New Orleans rendered its decision concluding the idea fell outside the boundaries of the law.

The court said in its ruling that the Securities and Exchange Commission (SEC) ought not to have approved the diversity strategy Nasdaq had proposed.

In accordance with the verdict, “it is not unethical for a company to refuse to disclose information regarding the racial, gender, and LGBTQ+ attributes of its directors.”

This may be the rationale included in the decision. The securities sector lacks established regulations requiring corporations to justify the absence of diversity in their boards of directors concerning race, gender, or sexual orientation, as advocated by Nasdaq. We are not cognisant of this matter here.

The Nasdaq keeps supporting the recommended policy as the best one of action.

“We maintain that the rule simplified and standardised disclosure requirements benefiting both corporations and investors,” said the National Association of Securities Dealers (Nasdaq). The statement featured this remark. When all the factors are considered, we really value the court’s ruling and do not want to pursue any more review.

On the Nasdaq exchange in the United States, nevertheless, there are also a significant number of businesses in the fields of finance, biotechnology, and industry. Technological companies like Apple and Microsoft rule Nasdaq.

The Securities and Exchange Commission also provided commentary.

“We are reviewing the decision and will determine next steps as appropriate,” one Securities and Exchange Commission (SEC) official said in a statement.

Many businesses are now doing more in-depth research into the diversity, equity, and inclusion strategies they have within their company directly in line with the court’s decision.

Many Democrats who are currently in Congress asked the most successful American businesses to keep running diversity, equity, and inclusion initiatives during the month of October. They claimed that kinds of activities like this enable everyone to have equal chances to fulfil the American dream.

Together with the other 49 House of Representatives members, California representative Robert Garcia issued an email to Fortune 1000 companies expressing their worries. The action was taken in reaction to several well-known businesses declaring in recent months that they will not be continuing or reducing their diversity, equity, and inclusion projects.

Many American businesses, including Ford, Harley-Davidson, John Deere, Lowe’s, and Molson Coors, cut the work they put into their diversity, equality, and inclusion (DEI) efforts during the summer.

Many companies have decided to stop supporting the cause after the Supreme Court of the United States decided against the use of affirmative action in college admissions and following the targeting of well-known American companies by conservative activists due of their diversity policies and programs.

SOURCE: USN

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