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A federal appeals court in Louisiana has ruled that Nasdaq can’t require diversity on the boards of companies that list on the exchange.
The decision comes more than three years after the Securities and Exchange Commission approved Nasdaq’s proposal to boost the number of women, racial minorities and LGBTQ people on U.S. corporate boards.
The proposed policy—which was to be the first of its kind for a U.S. securities exchange—would have required most of the nearly 3,000 companies listed on Nasdaq to have at least one woman on their board of directors, along with one person from a racial minority or who identifies as gay, lesbian, bisexual, transgender or queer. It also would have required companies to publicly disclose statistics on the demographic composition of their boards.
Some conservative groups and Republican lawmakers have strenuously opposed the proposal, arguing the requirements were arbitrary and burdensome.
And on Wednesday the Fifth U.S. Circuit Court of Appeals in New Orleans decided that the proposal was not legal.
The court said in its ruling that the SEC should not have approved Nasdaq’s proposed diversity policy.
