SEC Approves Nasdaq's Plan to Rescind Board Diversity Rules

The SEC has approved Nasdaq's request to rescind its board diversity rules following a ruling by the Fifth Circuit Court of Appeals, which determined that the SEC lacked the authority to enforce such regulations. The court's December decision declared that the SEC's approval of the diversity mandate overstepped its jurisdiction, as the regulations had significant economic implications that required explicit congressional authorization. The Nasdaq rules initially mandated that listed companies disclose board diversity statistics and include directors from underrepresented groups, but they will now be removed from the exchange's rulebook by February 4, 2025. Nasdaq's decision to withdraw the rules was made in light of the court's ruling, and the SEC has declared this change effective immediately. This development highlights ongoing tensions regarding the regulatory powers of the SEC and the implications of corporate diversity initiatives. The ruling raises questions about the future of similar diversity efforts across the financial sector.