Court rules against Nasdaq diversity rule (2024)
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The Fifth Circuit Court of Appeals ruled last week that the Securities and Exchange Commission (SEC) was wrong to approve the Nasdaq stock exchange’s 2021 rule establishing diversity requirements for all listed companies. The court agreed with the plaintiffs who alleged the SEC overstepped its legal authority in approving the rule.
Nasdaq argued the diversity rule showed the exchange was a leader in ESG investment strategies. The SEC, which has regulatory jurisdiction over exchanges, approved the rule, drawing anti-ESG opposition.
The ruling against the SEC continues a legal trend limiting the scope of federal ESG regulation.
According to the Wall Street Journal:
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Nasdaq’s diversity rules had put it at the forefront of ESG. One rule required Nasdaq-listed companies to disclose statistics about the gender and racial makeup of their boards. The other rule—which was being phased in over several years—required companies to meet certain minimum targets for diversity, or explain in writing why they hadn’t done so. In its ruling, the Fifth Circuit sided with two conservative groups that sued the SEC for approving Nasdaq’s proposed diversity rules in 2021. The groups argued that Nasdaq’s diversity targets amounted to an unlawful quota. They sued the SEC in its capacity as the stock exchange’s regulator. The SEC 'has intruded into territory far outside its ordinary domain,' Judge Andrew Oldham wrote in the ruling, writing on behalf of a majority of the Fifth Circuit.[1] |
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See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
Footnotes
- ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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