SEC’s Board Diversity Drive Runs Risk of More Legal Challenges

The SEC faces a legal fight over its efforts to encourage diversity on corporate boards, but an agency focus on disclosure over quotas would complicate conservative activists’ arguments.

The Securities and Exchange Commission already is facing two cases over its authorization of Nasdaq Inc. rules that require its listed companies to have diverse board members or explain why they don’t. More litigation could follow as the SEC is contemplating adopting, as early as next year, its own board diversity rules for a broader range of companies.

Legal challenges to the SEC’s anticipated rules could delay their implementation and interfere ...