Divided Fifth Circuit Strikes Down SEC’s Approval of Nasdaq Diversity Rules

In a 9-8 ruling issued Wednesday, the U.S. Court of Appeals for the Fifth Circuit reversed a panel’s October 2023 ruling and axed Nasdaq rules requiring certain diversity disclosures about directors of companies listed on the exchange.

The rules, which were approved by the U.S. Securities and Exchange Commission in 2021, had previously been upheld by a three-judge panel in October 2023 that found the rules were in compliance with the law. But after en banc review, nine judges determined Wednesday that the diversity rules “cannot be squared with the Securities Exchange Act of 1934.”