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Today is December 12. Below are some of the stories grabbing headlines this morning. I hope you share this briefing as doing so will make you the smartest person in the room. And don’t forget to download the free DML App from the Google Play or Apple App Store to remain connected to me throughout the day.
An appeals court has just dealt a major blow to the Securities Exchange Commission for approving “diversity, equity and inclusion” mandates.
From the Washington Post: The U.S. Court of Appeals for the 5th Circuit struck down a Nasdaq rule that sought to promote diversity on corporate boards, representing the latest blow to those efforts in the private sector.
In a 51-page opinion issued Wednesday, nine of 17 judges on the full 5th Circuit found the rule violates the Securities Exchange Act of 1934.
“In sum, Congress passed the original Exchange Act primarily to protect investors and the American economy from speculative, manipulative, and fraudulent practices,” the panel wrote. “SEC may not approve even a disclosure rule unless it can establish the rule has some connection to an actual, enumerated purpose of the Act.”
Eight judges dissented, saying the rule was consistent with the law and merely standardized relevant information sought by investors. The Securities and Exchange Commission approved the rule because the law “doesn’t permit the SEC to displace Nasdaq’s private business judgment — informed by investor behavior — with agency policy priorities,” the dissenters wrote.
The rule, approved by the SEC in August 2021, requires companies listed on the exchange to have at least two corporate board members from “diverse” backgrounds or explain in filings why they do not.
Cory Liu, an Adjunct Professor at the University of Texas School of Law, announced Wednesday evening:
BREAKING: The Fifth Circuit en banc, in an opinion by Judge Andrew Oldham, holds that the SEC acted unlawfully in approving a Nasdaq policy that forces corporate boards to implement an identity-based diversity quota that looks at race, sex, sexual orientation, and gender identity, or provide a written explanation for why they failed to meet the quota.
The opinion is technically complex, but elegant in sticking to just the law, walking through the history of the SEC. At its core, the opinion reasons that the SEC’s legal authority is to ensure a fair and honest marketplace and not to force politically motivated identity politics into corporate decision making. Link to the full decision in the comments.
https://www.ca5.uscourts.gov/opinions/pub/21/21-60626-CV0.pdf
— Cory Liu (@coryliu) December 12, 2024
Vivek Ramaswamy commented on the news, writing, “When an agency like the SEC is so repeatedly & thoroughly embarrassed in federal court for flouting the law, it loses its legitimacy as a law enforcement body.”
“Absolutely,” responded Elon Musk.
Absolutely https://t.co/wfqCK3kGjr
— Elon Musk (@elonmusk) December 12, 2024
The U.S. Court of Appeals for the 5th Circuit struck down a Nasdaq rule that sought to promote diversity on corporate boards, representing the latest blow to those efforts in the private sector.https://t.co/Af9YM97z1x
— The Washington Post (@washingtonpost) December 12, 2024
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