Senate Republicans Oppose Nasdaq Diversity Proposal

Senate Republicans urged the SEC to reject a Nasdaq Stock Market LLC proposed listing rule that would require that Nasdaq-listed companies take detailed steps to "advance board diversity and enhance transparency of diversity statistics."

On December 1, 2020, the Nasdaq Stock Market LLC ("Nasdaq") proposed listing rules that would require that Nasdaq-listed companies to, among other things:

• (i) have at least one director who self-identifies as a female and at least one director who self-identifies as an ethnic minority or as LGBTQ+ or (ii) explain why the company cannot meet such a requirement; and

• provide statistical information on the company's board of directors regarding gender, race and self-identification as LGBTQ+.

In a comment letter on the proposal to the SEC, Republicans on the U.S. Senate Committee on Banking, Housing, and Urban Affairs stated that "Nasdaq's narrow concept of mandated diversity" (i) interferes with a corporation's best interest duty, (ii) violates the concept of materiality by requiring disclosures that engage in social policymaking and (iii) harms economic growth by establishing unnecessary regulatory costs.

The Structured Finance Association (or "SFA") applauded Nasdaq's proposal saying that communities of color, women and minority groups are "woefully underrepresented on boards and in C-suites."