07 Oct 2021 SEC sued for approving Nasdaq ‘racist and sexist’ quota rules
Washington, DC – The National Center for Public Policy Research has filed a lawsuit against the United States Securities & Exchange Commission (SEC) for SEC approval of the diversity rules of the board of directors of the Nasdaq Stock Market, which require companies listed on the Nasdaq to establish a board of directors. quotas based on race, gender and sexual orientation, or explain why they did not.
The National Center, represented by the New Civil Liberties Alliance (NCLA), argues that the SEC does not have the power to set such quotas. The SEC’s regulator, established by the Securities and Exchange Act of 1934, limits itself to securities regulation to ensure fair markets and enforce federal laws that punish fraud. The lawsuit asserts that the approval of market rules establishing quotas for boards of directors exceeds this limited authority.
“The SEC has become increasingly politicized in recent years, and particularly since the arrival of President Gary Gensler,” said Scott Shepard, director of the National Center’s Free Enterprise Project. “He has a narrowly circumscribed authority: that of protecting shareholders in a limited way. This in no way extends to the kind social engineering attempted by the Nasdaq rule. It was therefore illegitimate for the SEC to approve the rule. The approval was particularly appalling because the current rule requires companies to subordinate merit to illegal discrimination based on race, gender and orientation, or to open up to the screaming crowd on the left.
The SEC approved Nasdaq Stock Market LLC Rules 5605 (f) and 5606 on August 6. The rules require listed companies to (a) disclose information about the self-identified gender, race and sexuality of members of their board of directors; and (b) either include in their council minimum quotas of individuals of certain gender, racial and sexual identities, or publicly explain why the council does not respect these quotas. The Nasdaq offers companies access to a list of “diverse board-ready candidates” who could meet the quotas. The ultimate enforcement mechanism for non-compliance with these rules is delisting the company from the Nasdaq.
The National Center submitted a comment to the SEC during the approval process in which it argued that the quotas exceed the authority of the SEC, are unconstitutional and illegal, and are inadmissible.
“By allowing the Nasdaq board’s plan to move forward, the SEC is completely flouting the US Constitution,” said Justin Danhof, Esq., Executive vice president of the National Center. “The people who run the Nasdaq may have no idea what is and isn’t constitutionally permitted, but SEC lawyers and regulators should know more. Companies should be free to appoint directors who will help them prosper. Mandating board appointments based on candidates’ skin color, gender and sexual partners is not only unconstitutional, but also flattering, racist, sexist and downright offensive. Hopefully the court will make a common sense decision reversing this drastic pattern.
The Nasdaq board’s diversity rules are also being challenged in parallel lawsuits.
To schedule an interview with a member of the Free Enterprise Project on this and other issues, contact Judy Kent at (703) 477-7476.
Launched in 2007, the National Center’s free enterprise project focuses on shareholder activism and the confluence of big governments and big corporations. In the past four years alone, VET representatives have participated in over 100 shareholder meetings – advancing free market ideals on healthcare, energy, taxes, subsidies, regulations, religious freedom, food policies, media bias, gun rights, workers’ rights and other important public policy issues. As the leading voice of conservative investors, he tables over 90% of all center-right shareholder resolutions each year. However, dozens of liberal organizations file more than 95% of all political shareholder resolutions each year and continue to exert undue influence over American companies.
The activity of VET was covered by the media, including the New York Times, Washington Post, USA Today, Variety, The Associated Press, Bloomberg, Drudge Report, Business Insider, National Public Radio, and SiriusXM. VET work featured prominently in new book by Stephen Soukup The Woke Capital Dictatorship: How Political Correctness Captured Big Business (Encounter Books) and the 2016 book by Kimberley Strassel The bullying game: how the left silences freedom of expression (Hachette Book Group).
The National Center for Public Policy Research, founded in 1982, is an independent, non-partisan conservative think tank. Ninety-four percent of its support comes from individuals, less than four percent from foundations and less than two percent from businesses. It receives more than 350,000 individual contributions per year from more than 60,000 recent active contributors. Sign up here to receive email updates.
The New Civil Liberties Alliance (NCLA) is a non-partisan, nonprofit civil rights group founded by eminent jurist Philip Hamburger to protect constitutional freedoms from violations by the administrative state. NCLA’s public interest litigation and other pro bono advocacy endeavors to tame the illegal power of state and federal agencies and foster a new civil liberties movement that will help restore basic human rights. Americans.