A federal appeals court on Wednesday ruled that Nasdaq could not impose rules requiring companies listed on the exchange to have women and minority directors on their boards or explain why they do not.
The New Orleans-based 5th US Circuit Court of Appeals on a 9-8 vote sided with two conservative advocacy groups in finding that the rules approved by the Securities and Exchange Commission ran afoul of federal securities law.
Those rules were challenged by the National Center for Public Policy Research, a conservative think tank, and Alliance for Fair Board Recruitment, a group founded by affirmative action opponent Edward Blum.
A three-judge panel of the 5th Circuit comprised entirely of appointees of Democratic presidents in October 2023 upheld the SEC’s 2021 decision to approve Nasdaq’s rules, saying the regulator acted within its authority.
But the full conservative-majority court opted to reconsider the matter. All nine judges in the majority were appointed by Republican presidents, including the ruling’s author, US Circuit Judge Andrew Oldham, who was appointed by President-elect Donald Trump in his first term.
