U.S. Appeals Court Strikes Down Nasdaq Board Diversity Rules

The 5th US Circuit Court of Appeals has struck down Nasdaq’s rules requiring listed companies to include women and minority directors on their boards or explain their absence, Reuters reported.

The court's decision highlights a growing legal pushback against corporate diversity mandates, reflecting broader debates over affirmative action and inclusion policies. I Photo: Ajay Suresh Flickr

In a 9-8 decision, the conservative-majority court ruled that the rules, approved by the SEC in 2021, exceeded the regulator’s authority and violated federal securities laws. The ruling overturned a prior decision by a three-judge panel from the same court, which had upheld the rules in October 2023.

The challenge to the rules was spearheaded by the National Center for Public Policy Research and the Alliance for Fair Board Recruitment, a group led by Edward Blum, a well-known opponent of affirmative action.

Writing for the majority, US Circuit Judge Andrew Oldham, an appointee of President Donald Trump, argued that the rules imposed unconstitutional requirements on companies seeking to list on Nasdaq.

The court's decision highlights a growing legal pushback against corporate diversity mandates, reflecting broader debates over affirmative action and inclusion policies.