US Court of Appeals strikes down Nasdaq board’s diversity rules

A US appeals court ruled on Wednesday that Nasdaq could not impose rules requiring exchange-listed companies to have women and minority directors on their boards or to explain why they do not.

The 5th U.S. Circuit Court of Appeals in New Orleans ruled 9-8 in favor of two conservative groups that rules adopted by the U.S. Securities and Exchange Commission violated federal securities law.

Those rules were challenged by the National Center for Public Policy Research, a conservative think tank, and the Alliance for Fair Board Recruitment, a group founded by affirmative action opponent Edward Blum.

In October 2023, the three-judge 5th Circuit’s three-judge SEC upheld its 2021 decision to approve Nasdaq’s rules, saying the regulator had acted within its authority.

But the all-conservative majority court decided to revisit the issue. Nine of the majority’s judges 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.