Federal Court Strikes Down Nasdaq's Board Diversity Rules

The 5th Circuit Court ruled the SEC lacked authority to approve Nasdaq's diversity disclosure mandate, marking a setback for corporate DEI efforts.

The 5th U.S. Circuit Court of Appeals ruled 9-8 against Nasdaq's diversity rules, stating the SEC overstepped its authority under federal securities law.
Nasdaq's rules required listed companies to include women, minorities, or LGBTQ individuals on boards or explain their absence, alongside annual diversity reporting.
The challenge was brought by conservative groups, including the Alliance for Fair Board Recruitment, which argued the rules encouraged discrimination.
Nasdaq stated it respects the court's decision and will not appeal, while the SEC is reviewing the ruling and considering next steps.
The decision reflects broader challenges to diversity, equity, and inclusion initiatives in corporate America, with some companies scaling back such programs under legal and political pressure.