Diversity or Discrimination? Amicus Brief Argues Against Nasdaq’s Board Diversity Rule

Lori Kalani, Bernard Nash
Cozen O'Connor
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Cozen O'Connor

  • A group of 17 Republican AGs, led by Arizona AG Mark Brnovich, filed an amicus brief in the U.S. Court of Appeals for the Fifth Circuit in Alliance for Fair Board Recruitment v. SEC, No. 21-60626, in support of a challenge to the SEC’s approval of a Nasdaq board diversity rule.
  • The challenged Nasdaq rule creates a comply-or-explain mandate for board diversity for companies listed on its U.S. exchange, whereby companies must either have, or explain why they did not have, at least two self-identified diverse members of their board of directors. It also requires listed companies to publicly disclose statistics for the diversity of their boards.
  • The brief argues that the SEC’s approval of the Nasdaq rule attempts to regulate corporate governance, an area that is traditionally left for the states. The brief also argues that the Nasdaq rule is unconstitutional and violates several state laws because it discriminates in employment on the basis of race or sex by requiring corporations to classify directors based on these factors.

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