The National Center for Public Policy Research is taking issue with the SEC's August 6 approval of the Nasdaq Stock Market's board diversity rules – rules that require Nasdaq-listed companies to either establish board of director quotas on the basis of race, sex, and sexual orientation … or explain in writing why they haven't done so.
"The SEC has acted beyond its authorization in approving this rule," says the National Center's Scott Shepard. "It is not allowed to approve this rule."
He continues: "And Nasdaq moved beyond its authorization by establishing this rule [because] all it's supposed to do is make markets run regularly. Neither organization was established or is permitted to social engineer, and that's what this is doing."
Nasdaq is even offering companies access to a list of what it labels as "board-ready diverse candidates" to help meet the quotas – and evidently make those boardrooms "less overwhelmingly male and white." But Shepard argues that board members should be based on merit.
New Civil Liberties Alliance is representing the National Center in the lawsuit.
"They filed in the Third Circuit, but the first thing they filed was to transfer the case to the Fifth Circuit," Shepard explains. "There's a case already moving in [that] Circuit, and this will combine those cases so that they'll be heard by the same circuit rather than running the potential of an immediate circuit split."
NCPPR argues that the federal agency is opening itself to the "howling left-wing mob" by illegitimately approving the rule.