Well – this took four months. The U.S. Court of Appeals for the Fifth Circuit ordered en banc rehearing of an unsuccessful challenge to the Securities and Exchange Commission’s approval of the Nasdaq Stock Market’s rules concerning diversity of directors on boards of Nasdaq-listed companies. The rules – which a panel of the Fifth Circuit upheld in October 2023 – require listed companies to disclose director-diversity information and either to have a certain number of diverse directors or to explain why not. We blogged about that decision here.
NASDAQ
Fifth Circuit Court of Appeals Rejects Challenge to Nasdaq’s Board-Diversity Rules
By Jonathan Richman on
The U.S. Court of Appeals for the Fifth Circuit denied review of the Securities and Exchange Commission’s approval of proposed rules promulgated by the Nasdaq Stock Market concerning the diversity of directors on Nasdaq-listed companies’ boards. The rules require listed companies to disclose director-diversity information and either to have a certain number of diverse directors or to explain why not. The decision in Alliance for Fair Board Recruitment v. SEC held that the rules do not violate the Constitution and that the SEC did not violate its statutory obligations in approving them.
The Nasdaq rules do not require board diversity; they require only disclosures and explanations. But the need to comply with the rules could have the practical effect of increasing diversity on boards of Nasdaq-listed companies.
SEC Greenlights Board Diversity Requirements
By Joseph Hartunian on
After much debate, the SEC on Friday approved a Nasdaq proposal that will require listed companies to adopt several diversity-related measures. Nasdaq first made this proposal, which requires listed companies to publicly disclose diversity information about their board members and either hire “diverse” members to their boards or explain why they do not in writing, last December. Under SEC regulations, self-regulatory organizations such as Nasdaq must formally submit proposed rule changes to the Commission. Nasdaq made some minor revisions to the proposed rule in February that granted smaller boards and newly listed companies some compliance leeway, but the proposal has otherwise survived scrutiny from conservatives, corporate interests, and popular newspaper editorial boards.
SEC Punts NASDAQ Diversity Decision
By Joseph Hartunian on
After receiving extensive outside pressure from a variety of sources, include Senate Republicans, the SEC announced last week that it is deferring its decision on whether to approve a Nasdaq proposal to require “diverse” members on companies’ boards. The SEC is also simultaneously awaiting the confirmation of its new…
Senate Republicans Attack NASDAQ’s Board Diversity Rule
By Joseph Hartunian on
On February 12, 2021, the Republican members of the Senate Committee on Banking, Housing, and Urban Affairs wrote a letter to the Acting Chair of the SEC bashing a recently proposed rule of Nasdaq that would promote corporate diversity for listed companies.
Second Circuit Extends Scope of Federal Jurisdiction In Litigation Arising From The Facebook IPO
By Harry Frischer on
In a recent case arising from the Facebook IPO, NASDAQ OMX Group v. UBS Securities, LLC, No. 13-Civ. 2657 (2d Cir. October 31, 2014), the Second Circuit determined that the federal courts had jurisdiction to enjoin an arbitration against NASDAQ, finding that the case implicated important federal issues regarding the regulation of an orderly securities market, even though the underlying claims were based solely upon state law. In a strong dissent, Judge Chester J. Straub argued that majority decision extended federal court jurisdiction “far beyond its permissible bounds,” and that the decision would likely lead to an unwarranted increase in federal litigation.