A free-market research foundation is taking a dim view of a plan on Wall Street that would require major corporations – if they want to be listed on Nasdaq – to have on their boards at least one self-identified woman and one self-identified "underrepresented minority" or LGBTQ.
The Nasdaq stock market is seeking authority to require more "diversity" in the boardrooms of Nasdaq-listed companies. It is the first major exchange to pursue such a requirement.
If approved, the proposal – filed Tuesday with the U.S. Securities and Exchange Commission (SEC) – would require all companies listed on the Nasdaq to publicly disclose consistent, transparent diversity statistics about their board of directors. And it would require most Nasdaq-listed companies to have, or explain why they don't have, at least two diverse directors. This includes having one board member who self-identifies as female and one who self-identifies as either an underrepresented minority or LGBTQ.
Justin Danhof of the Free Enterprise Project at the National Center for Public Policy Research believes this is unconstitutional.
"I think lawsuits should abound if the SEC goes forward with this nonsense," Danhof tells One News Now. "I really urge the SEC to just shut this down immediately – but I suspect that's not going to happen."
While the SEC could approve it, a third option would involve a rule-making process, one where the proposal would be put up for public comment and a decision made at a later date.
"I suspect that is the route the SEC will take; but let's be very, very clear what the Nasdaq is doing," Danhof continues. "They are suggesting that you should not be listed on their exchange unless your board consists of a minority and/or LGBT individual and a woman. You must have both of those."
Companies that can't meet the objectives of board composition within the required timeframes won't be subject to delisting if they provide a public explanation of their reasons for not meeting the objectives. Still, Danhof says companies will toe the line if this becomes the rule.
"They don't want to put the scarlet letter on their own chest [and risk] being taken to the woodshed by the Twitter mob," he explains.
"A lot more people need to realize that this is not some flowery, feel-good story that [should make us say] 'Oh yay, there's a few more women going to be on boards now.' No, this is an intentional takeover of our corporate culture – and it's happening right in front of our faces."