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CASE: National Center for Public Policy Research v. SEC

STATUS: Active

NCLA ROLE: Counsel

COURTS HEARD IN: 3rd Cir., 5th Cir.

ORIGINAL COURT: U.S. Court of Appeals for the Third Circuit

DECIDING COURT: U.S. Court of Appeals for the Fifth Circuit

OPENED: October 5, 2021

AGENCIES: Securities and Exchange Commission

FOCUS AREAS:

Due Process Violations

The due process of law guarantees a right to be held to account only through the processes of an impartial court—something administrative tribunals violate every day.

Scope of Authority / Nondelegation

The structure of the Constitution allows only Congress to legislate, only the Executive to enforce laws, and only the Judiciary to decide cases. But the Administrative State evades the Constitution’s avenues of governance when executive agencies issue regulations without statutory authorization from Congress.

CASE SUMMARY

The U.S. Securities and Exchange Commission (SEC) received pushback for approving Nasdaq’s Board Diversity Rules, which required all companies listed on the exchange to not only publicly disclose board diversity statistics but also explain failures to meet new diversity requirements. NCLA’s client, the National Center for Public Policy Research, which owns shares in many Nasdaq companies, argues that SEC has no power to regulate in this field because the rules have nothing to do with fraud or honest markets.

The Rules fell outside of SEC’s regulatory authority under the 1934 Securities and Exchange Act, which empowered SEC to regulate securities to ensure honest markets and enforce federal laws that punish fraud. These longstanding laws are being misinterpreted today by SEC to allow the agency, working with Nasdaq, to impose a “meet quota, explain why, or get delisted” regime.

In December 2024, NCLA convinced the en banc U.S. Court of Appeals for the Fifth Circuit to vacate the Rules.

OUR CLIENT

OUR TEAM

Mark Chenoweth
President and Chief Legal Officer
Sheng Li
Litigation Counsel
Margaret A. Little
Senior Litigation Counsel
Andrew Morris
Senior Litigation Counsel

RELEVANT MATERIALS

NCLA FILINGS

Opinion of the U.S. Court of Appeals for the Fifth Circuit

December 11, 2024 | Read More

Petitioners' Join Reply Brief on Petitions for Review of an Order of the Securities & Exchange Commission

September 17, 2024 | Read More

En Banc Reply Brief for Petitioner National Center for Public Policy Research

May 7, 2024 | Read More

National Center for Public Policy Research’s Brief on Rehearing en Banc

March 21, 2024 | Read More

Petition for Rehearing or Rehearing en Banc

November 27, 2023 | Read More

SEE 16 FILINGS
PRESS RELEASES

NCLA Persuades en Banc Fifth Circuit to Vacate Legally Defective Nasdaq Board Diversity Rules

December 12, 2024 | Read More

NCLA Asks en Banc Fifth Circuit to Vacate Legally Defective Nasdaq Board Diversity Rules

March 22, 2024 | Read More

En Banc Fifth Circuit Will Hear NCLA Lawsuit Against Legally Defective Nasdaq Board Diversity Rules

February 20, 2024 | Read More

NCLA Asks en Banc Fifth Circuit to Overturn Nasdaq Board Diversity Rules as Unauthorized by Statute

November 27, 2023 | Read More

Watch: SEC’s “Comply or Report” Rules Pushing Diversity Quotas on Nasdaq Corporate Boards Face NCLA Challenge

October 5, 2022 | Read More

SEE 7 PRESS RELEASES
IN THE MEDIA

Nasdaq’s Discriminatory Board-Quota Rule Should Be Defeated In Court

May 15, 2023

Nasdaq’s Diversity Rule for Corporate Boards Faces Legal Challenge

The Washington Times

February 7, 2023

Discussing the NASDAQ Board Diversity Rule Challenge

The National Law Review

February 7, 2023

5th Circuit Questions Claim That SEC Put Nasdaq on a ‘Woke Mission’ for Board Diversity

Reuters

February 7, 2023

Appeals Court Hears Arguments on Nasdaq’s Board Diversity Rules

American Banker

February 7, 2023

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