Judges state the board information is important for transparency.
The 5th Circuit Court of Appeals rejected the latest lawsuit filed by Edward Blum and upheld Nasdaq’s board diversity rule on the grounds that it is an important inclusion to broader market information.
The National Center for Public Policy Research and the Alliance for Fair Board Recruitment tried to block Nasdaq’s rule that requires all registered companies to either include multiple women and members of minority groups in their board of directors or to explain why they do not. The group claimed that the rule violates free speech and is a discriminatory law, stating that the Securities and Exchange Commission (SEC) should not have approved the rule in the first place.
The three judges on the 5th Circuit Court panel ruled that violations of the Constitution apply mainly to the actions of the government, not private companies. Not only that, the court said, but many investors make important investment decisions based on the makeup of a company’s board, making it a crucial transparency rule to keep in place.
“This evidence is sufficient to support the SEC’s determination that regardless of whether investors think that board diversity is good or bad for companies, disclosure of information about board diversity would inform how investors behave in the market,” the panel wrote in the opinion.
As the Lord Leads, Pray with Us…
- For the circuit court judges across the nation as they hear and decide appeals.
- For wisdom for justices and judges of the federal judiciary as their rulings shape the nation.
Sources: Reuters, Washington Post
