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Nasdaq Board-Diversity Regulations Face Another Court Challenge

Oct. 5, 2021, 10:44 PM

A conservative think tank asked a federal appeals court to review the SEC’s approval of Nasdaq Inc. rules intended to boost the number of women and minorities on corporate boards.

The National Center for Public Policy Research on Tuesday submitted a petition with the U.S. Court of Appeals for the Third Circuit to review the regulations the Securities and Exchange Commission approved Aug. 6.

Another group, the Alliance for Fair Board Recruitment, previously filed a challenge to the rules Aug. 10 in the U.S. Court of Appeals for the Fifth Circuit. The alliance also sued over California’s requirement for corporate board diversity.

The Nasdaq rules require companies listed on the exchange to have at least one female board member and at least one who identifies as an underrepresented minority or LGBTQ—or explain why they don’t.

The SEC doesn’t have the authority to approve board diversity requirements for Nasdaq-listed companies, said Peggy Little, senior litigation counsel for the New Civil Liberties Alliance, which is representing the National Center for Public Policy Research.

“Congress could not constitutionally confer this power on any administrative agency,” Little said in a statement. “And the government may not collaborate with Nasdaq to effectuate something it is prohibited by the Constitution to do itself.”

SEC Chair Gary Gensler has defended the agency’s approval, saying it followed the law. But the agency’s Republican Commissioners, Hester Peirce and Elad Roisman, said the SEC failed to meet its legal obligations when it endorsed the rules.

Representatives for the SEC and Nasdaq declined to comment.

The case is National Center for Public Policy Research v. SEC, 3d Cir., petition for review filed 10/5/21.

To contact the reporter on this story: Andrew Ramonas in Washington at

To contact the editor responsible for this story: Michael Ferullo at