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☆ Appeals court will rehear challenge to Nasdaq board diversity rule, putting mandate at risk
▼ + stars: | 2024-02-20 | by ( Dan Mangan | ) www.cnbc.com time to read: +2 min

A federal appeals court agreed to rehear a challenge by two conservative groups to Nasdaq's board diversity rule related to the disclosure of women and minority membership on boards of companies listed on the stock exchange. The 5th Circuit U.S. Court of Appeals, in its order Monday night setting a rehearing, also vacated a decision in October upholding the Nasdaq rule by a three-judge panel from the appeals court, which encompasses Texas, Louisiana, and Mississippi. The Nasdaq rule requires companies to disclose details about the diversity of their boards of directors, and to either have a minimum number of women and minorities on their boards or explain why they do not. "NASDAQ's rule promotes racial discrimination and polarizing personal disclosures and it is to be hoped that this rule is struck down," Blum said. The SEC and Nasdaq did not immediately respond to requests for comment on the rehearing order.

Persons: Edward Blum, " Blum, Margaret Little Organizations: Times, NASDAQ, 5th Circuit U.S, of Appeals, Nasdaq, Securities, Exchange, Alliance for Fair, National Center for Public Policy Research, Fifth Circuit, SEC Locations: New York City, Texas, Louisiana, Mississippi

Circuit Court of Appeals rejected lawsuits seeking to block the rule last week, saying constitutional claims do not apply to Nasdaq, which is a private entity. The Alliance for Fair Board Recruitment, one of the groups that sued, is now requesting the full 5th Circuit to review that ruling. The 5th Circuit said in its Oct. 18 ruling that while the government regulates Nasdaq, it does not control the exchange. The case is Alliance For Fair Board Recruitment v. SEC, 5th U.S. Circuit Court of Appeals, No.

Persons: Edward Blum, Jody Godoy, Aurora Ellis Organizations: U.S . Securities, Exchange Commission, SEC, U.S, Circuit, Nasdaq, Fair, Harvard University, University of North, Republican, Democratic Biden, Democratic, Companies, Thomson Locations: University of North Carolina, New York

The Nasdaq logo is displayed at the Nasdaq Market site in Times Square in New York City, U.S., December 3, 2021. The SEC acted within its authority in approving the rule, and was allowed to consider the opinions of investors who said board diversity information was important to their investment decisions, the court said. "This evidence is sufficient to support the SEC's determination that regardless of whether investors think that board diversity is good or bad for companies, disclosure of information about board diversity would inform how investors behave in the market," the panel wrote. They said the rule is not a quota but a disclosure requirement that provides standardized information on board diversity. Circuit Court of Appeals, No.

Persons: Edward Blum, Blum, Biden, Jody Godoy, Mark Porter, Jonathan Oatis Organizations: Nasdaq, REUTERS, Circuit, National Center for Public Policy Research, Alliance for Fair, SEC, Harvard University, University of North, U.S . Securities, Exchange Commission, Companies, Republican, Democratic, Fair, U.S, Thomson Locations: New York City, U.S, New Orleans, University of North Carolina, New York

The Supreme Court is scheduled to hear arguments in the two cases on Monday, with rulings due by the end of June. Blum's goal is for the Supreme Court to overturn its own precedents allowing race as a factor in admissions. Blum raised more than $8 million from 2015 to 2020 for Students for Fair Admissions, most going to covering legal fees. No Students for Fair Admissions members served as plaintiffs or testified in court in the Harvard and UNC cases as the group lost in lower courts. The Supreme Court in January agreed to hear appeals backed by Blum in both cases.

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