Wow. By a 9-8 vote – that’s a close one! – the 5th Circuit decided that the SEC exceeded its authority when it approved the Nasdaq’s board diversity rule in Alliance for Fair Board Recruitment v. SEC last week. The 5th Circuit’s decision overrules a 5th Circuit panel decision from October 2023 that upheld the Nasdaq’s rule. It’s being reported that Nasdaq doesn’t intend to appeal the ruling.
Given that most Nasdaq-listed companies had no trouble disclosing that they met Nasdaq’s minimum number of diverse directors, this development won’t impact many companies. But for those few companies that have had trouble recruiting directors and have had to explain why they didn’t meet the minimum diverse director requirement, the long saga over this rule appears to be over.
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