Current:Home > MyAppeals court scraps Nasdaq boardroom diversity rules in latest DEI setback -Profound Wealth Insights
Appeals court scraps Nasdaq boardroom diversity rules in latest DEI setback
View
Date:2025-04-14 08:02:12
A federal appeals court blocked Nasdaq rules to increase boardroom diversity, saying that the Securities and Exchange Commission did not have the authority to approve them.
Wednesday’s ruling from the Republican-dominated 5th US Circuit Court of Appeals scraps diversity rules approved by the Securities and Exchange Commission in 2021.
The rules required thousands of public companies that trade on Nasdaq to have at least one woman, person of color or LGBTQ member on their boards unless they explained why they did not. Companies also must report the diversity of their corporate directors each year.
The legal challenge was brought by the National Center for Public Policy Research, a conservative think tank, and Alliance for Fair Board Recruitment, a group founded by anti-affirmative action activist Edward Blum. The groups claimed the boardroom diversity rules violate civil rights laws and encourage racial and gender discrimination.
The Nasdaq said it reviewed the court's decision and would not "seek further review."
Holiday deals:Shop this season’s top products and sales curated by our editors.
"We maintain that the rule simplified and standardized disclosure requirements to the benefit of both corporates and investors," it said in a statement to USA TODAY.
Stefan Padfield, director of the Free Enterprise Project at the National Center for Public Policy Research, said the court reached "the right conclusion."
"The SEC was reaching beyond its statutory authority to try and engage in progressive social engineering," Padfield told USA TODAY. "The court's decision here is not only correct on the law, but also consistent with the will of the American people, who are sick and tired of seeing their government engage in divisive identity politics."
Two men fought for jobs in a mill:50 years later, the nation is still divided.
Though corporate diversity, equity and inclusion efforts are broadly supported by the American public – especially younger Americans – they face growing scrutiny in the courts and in statehouses across the country as conservative foundations, think tanks and political operatives push back against diversity, equity and inclusion policies in corporate America.
The effort to foster greater diversity on corporate boards is facing other challenges. A multistate probe is investigating whether the Nasdaq has run afoul of anti-discrimination laws.
“Given Nasdaq’s zealous desire to impose quotas on companies, several of which are headquartered in our states, we are interested in learning what policies Nasdaq has in place to ensure its listed companies are following federal and state anti-discrimination laws,” the attorneys general of 22 states wrote in a joint letter released in October.
The court ruling is the latest setback for DEI, which is facing growing legal challenges.
After the murder of George Floyd in 2020 forced a historic reckoning with race in America, businesses pledged to make their workforces and their leadership better reflect the communities they serve.
Under pressure from investors and regulators, they shuffled their slate of corporate directors to add more Black executives and women to the line-up.
California passed laws requiring publicly traded companies headquartered in the state to add women and people from underrepresented groups to their boards of directors or face hefty fines. The laws were effective in boosting diversity on boards but were struck down in the courts.
Employees of color are underrepresented at every level of power in corporate America, according to USA TODAY data investigations. One analysis in 2023 found that white men account for 7 in 10 executive officers in the nation’s largest companies. About 1 in 7 of these companies had executive teams made up only of white men.
DEI critics allege that women and people of color are being handed jobs and promotions at the expense of more qualified and deserving candidates.
On the campaign trail, President-elect Donald Trump promoted the idea that white Americans were targets of racism and made reversing Joe Biden’s “woke takeover” of Washington a priority of his second term in office.
Proponents say DEI programs are critical to level the playing field for people of color and women. JPMorgan Chase’s Jamie Dimon and other business leaders have repeatedly stressed that diversity is good for business.
Previously a three-judge panel of the 5th Circuit upheld the SEC’s approval of the Nasdaq rules in 2021, finding that the regulator acted within its authority.
But the full court decided to take up the matter. All nine judges in the majority were appointed by Republican presidents, including the ruling’s author, US Circuit Judge Andrew Oldham, who was appointed by President-elect Donald Trump in his first term.
Reuters contributed to this report.
(This story has been updated to add information.)
Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
veryGood! (146)
Related
- Kentucky Gov. Andy Beshear ready to campaign for Harris-Walz after losing out for spot on the ticket
- 'Tiger King' director uncages new 'Chimp Crazy' docuseries that is truly bananas
- Former NASCAR champion Kurt Busch arrested for DWI, reckless driving in North Carolina
- Keke Palmer Shares How 17-Month-Old Son Leodis Has Completely Changed Her Life
- Newly elected West Virginia lawmaker arrested and accused of making terroristic threats
- Horoscopes Today, August 15, 2024
- Jury begins deliberations in trial of white Florida woman in fatal shooting of Black neighbor
- Looking to buy a home? You may now need to factor in the cost of your agent’s commission
- Taylor Swift Eras Archive site launches on singer's 35th birthday. What is it?
- 15-year-old who created soap that could treat skin cancer named Time's 2024 Kid of the Year
Ranking
- 'Stranger Things' prequel 'The First Shadow' is headed to Broadway
- Babe Ruth jersey could sell for record-breaking $30 million at auction
- Jordan Chiles breaks silence on Olympic bronze medal controversy: 'Feels unjust'
- Delta says it’s reviewing how man boarded wrong flight. A family says he was following them
- Senate begins final push to expand Social Security benefits for millions of people
- Texas couple charged with failing to seek medical care for injured 12-year-old who later died
- Texas couple charged with failing to seek medical care for injured 12-year-old who later died
- BeatKing, Houston Rapper Also Known as Club Godzilla, Dead at 39
Recommendation
Everything Simone Biles did at the Paris Olympics was amplified. She thrived in the spotlight
Rail bridge collapses on US-Canada border
Ohio State coach Ryan Day names Will Howard as the team's starting quarterback
How Volleyball Player Avery Skinner Is Approaching the 2028 LA Olympics After Silver Medal Win
The seven biggest college football quarterback competitions include Michigan, Ohio State
Former NASCAR champion Kurt Busch arrested for DWI, reckless driving in North Carolina
South Carolina man suing Buc-ee's says he was injured by giant inflatable beaver: Lawsuit
Eagles top Patriots in preseason: Tanner McKee leads win, pushing Kenny Pickett as backup QB