Fifth Circuit Vacates SEC Order Approving Nasdaq Board Diversity Rules

On December 11, 2024, the US Court of Appeals for the Fifth Circuit vacated the US Securities and Exchange Commission's (SEC) order approving The Nasdaq Stock Market LLC's (Nasdaq) board diversity rules, holding that the rules did not relate to the purpose of the Securities Exchange Act of 1934 (Exchange Act) nor did the SEC have the authority to approve the rules.

In Depth

In August 2021, the SEC approved Nasdaq's proposed diversity rules, which required issuers listed on the exchange to:

• Have, or explain why it does not have, at least two directors who are diverse, including at least one director who self-identifies as female and at least one director who self-identifies as an underrepresented minority or LGBTQ+ (Rule 5605(f))