Court Blocks Nasdaq's Diversity Push

A U.S. appeals court ruled against Nasdaq's diversity requirements for corporate boards, stating they conflict with federal securities law. The decision, a win for opponents of diversity mandates, may lead to an appeal. Nasdaq respected the ruling while acknowledging the intended benefits of its proposal.

A U.S. appeals court has blocked Nasdaq from requiring companies listed on its exchange to have women and minority directors on their boards, citing conflicts with federal securities law. The New Orleans-based 5th U.S. Circuit Court of Appeals delivered the 9-8 ruling on Wednesday, marking a significant win for those opposing corporate diversity mandates.

The challenge was spearheaded by the National Center for Public Policy Research and Alliance for Fair Board Recruitment, organizations aiming to halt diversity policies. The court's decision sided with the conservative-majority, reversing a prior panel's decision to uphold the rules approved by the SEC. The move challenges the SEC's jurisdiction over corporate diversity measures.

Judge Andrew Oldham stated that Nasdaq's rules extend beyond the SEC's traditional remit. Following the decision, Nasdaq indicated it would comply with the ruling without seeking an appeal, maintaining that its proposal offered benefits to both companies and investors.

(With inputs from agencies.)