Slew of state AGs demand answers from stock exchange over its ‘zealous desire’ to push diversity quotas

A coalition of 22 state attorneys general sent a letter to the Nasdaq stock exchange Thursday demanding answers over its “zealous desire” to push diversity quotas onto corporations listed on the exchange.

Nasdaq proposed a regulation in 2020 stipulating corporations have at least two “diverse” directors, including at least one woman and at least one person who is either “LGBTQ+” or a racial minority, before later reframing the rule as “aspirational and not mandatory,” according to the letter. The attorney generals then suggested the policy might conflict with state and federal anti-discrimination laws, and that Nasdaq only made it optional once confronted with legal objections.

“For more than three years, Nasdaq has defended as something other than a quota a policy that looks like a quota and acts like a quota,” the attorney generals wrote. “We require assurances that you have in place policies that ensure state and federal anti-discrimination laws are followed.”

I just put Nasdaq on notice for the discriminatory gender, sexuality, & race-based quotas it sets for directors.

No matter how Nasdaq tries to spin it, we know that if it walks like a duck & talks like a duck, it’s a duck.https://t.co/GrKqfCCt6L

— Iowa AG Brenna Bird (@AGIowa) October 3, 2024

A lawsuit determining the policy’s legality is currently pending after the Fifth Circuit heard arguments in May, with 24 states joining amicus briefs opposing the race- and gender-based quotas, and the court is said to be “skeptical” of the rule. In their letter to Nasdaq CEO Adena Friedman, the attorneys general drew parallels between the exchange’s diversity rule and race-based admissions at universities, saying the U.S. Supreme Court was clear that “eliminating racial discrimination means eliminating all of it.”

The letter also requested Nasdaq submit “specific documentation” showing the exchange requires listed companies to follow anti-discrimination laws and a legal analysis explaining how the non-mandatory diversity quota policy does not conflict with those regulations.

“Not only is this [Nasdaq’s diversity rule] illegal, it’s morally repugnant, especially for an organization that is supposed to serve as the platform for capital formation and allocation,” Will Hild, executive director of Consumer’s Research, said in a post on X. “Make no mistake, this rule isn’t just bad for workers, it’s bad for consumers, who lose out when corporations focus on committing gross racial discrimination rather than improving their products.”

Nasdaq did not immediately respond to a request for comment.

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