BestLawyerTips | News – A federal appeals court in New Orleans will reevaluate a challenge by conservative organizations to a Nasdaq regulation mandating corporations to report board diversity, or lack thereof, following an earlier panel of the court’s upholding of the requirement.
On Monday, the conservative-leaning 5th U.S. Circuit Court of Appeals ruled in favor, opening the door for the whole court to review the case under a new tab. The prior ruling made by a three-judge panel in October was overturned, and arguments were provisionally set for mid-May.
Since Republican presidents have nominated more than two thirds of the 17 sitting judges on the 5th Circuit, conservative and business organizations frequently use the court to contest regulations enacted under the Biden administration.
Companies listed on the exchange are required to designate one director who identifies as female, a member of an underrepresented racial or ethnic minority, or LGBTQ+, or provide an explanation if they do not, according to a regulation authorized by the U.S. Securities and Exchange Commission (SEC) in August 2021.
By the year 2026, it is expected that a majority of the companies would be requiring for two directors who are gender diverse in order to comply with the regulation.
Conservativist legal actors, as the Alliance for Fair Board Recruitment, an organization led by Edward Blum, the one also qualified as an opponent of affirmative action, filed many legal challenges against the regulation.
It was the challenges that led to the Supreme Court ruling in its June decision on June 1, 2022, after the race-conscious admissions procedures employed by Harvard University and the University of North Carolina were found illegal, that were brought by a different organization that was created by Blum.
We are hopeful that the Fifth Circuit will put an end to this kind of intrusive and illegal race, sex, and also sexual identity quotas for all the Nasdaq listed companies, ” Blum commented in a press statement.
On Tuesday, a Nasdaq spokesperson refused to share any additional information.
The conservative groups argue that the regulation is unconstitutional because it prohibits discriminatory legislation and limits on free expression. They maintained that Nasdaq is subject to these government limitations as the SEC may fine the exchange for failing to uphold the regulation.
In October, a three-judge panel for the 5th Circuit dismissed such arguments, stating that Nasdaq is a private company and hence not subject to constitutional claims.
Democratic presidents appointed the judges on the panel. Judges of the appeals court are usually allocated cases at random.
Source: Reuters