Fifth Circuit Invalidates SEC Ruling Requiring NASDAQ Listed Companies to Satisfy Race- and Sex/LGBTQ+-Based Quotas

Yesterday, the Fifth Circuit, sitting en banc, invalidated a SEC quota-based rule for NASDAQ-listed companies. The rule generally required companies to satisfy certain conditions race-/ sex-/LGBTQ+-based quotas for their board members or to explain why they had failed to satisfy SEC’s quota-based targets. The Rule was challenged as both exceeding the authority of the SEC and violating the Equal Protection Clause of the Constitution.

The Fifth Circuit held that SEC’s quota rule exceeded the agency’s statutory authority and thus did not reach the constitutional challenge. It further held that the issue triggered the major questions doctrine, which is an important precedent for future SEC rulemakings.

Drew Ensign was retained to draft multi-state amicus briefs for Utah, both to convince the Fifth Circuit to rehear the case en banc and then to invalidate the challenged Rule. He previously led a multi-state brief for Arizona at the panel-stage while at the Arizona Attorney General’s office.

Links to the Fifth Circuit’s decision and the amicus briefs are included below.

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