Federal appeals court throws out Nasdaq board's diversity rules

The New Orleans-based 5th U.S. Circuit Court of Appeals has rejected the Nasdaq diversity disclosure rules for companies that are listed on the stock exchange.

The conservative-leaning federal appeals court ruled Wednesday the Security and Exchange Commission lacks the authority to approve the rules, which required companies to "have at least two diverse directors (including at least one woman and one member of an underrepresented minority or who self-identifies as LGBTQ+) or explain their failure to meet the requirement," according to a Harvard University analysis.

The SEC formally adopted the rules in August 2021.