Republicans on the Senate Banking Committee are urging the U.S. Securities and Exchange Commission (SEC) to block the diversity requirements proposed by Nasdaq for listed companies.
Legislators led by Sen. Pat Toomey
Patrick (Pat) Joseph Toomey The government used the Patriot Act to gather records of website visitors in 2019 The appeals court rules that mass collection of illegal NSA phone data Dunford withdraws from consideration to chair the MORE coronavirus monitoring panel (R-Pa.), Senior Member of the Committee, sent a letter to incumbent SEC President Allison Herren Lee, who urged her Friday to urge her not to approve the rule.
“It is not the role of the NASDAQ, as a self-regulatory organization, to act as an arbiter of social policy or to force a mandatory solution for all markets and investors,” the letter says.
Senators argue that the rules interfere with the board’s duty to its shareholders, violate the principles governing the disclosure of securities, impose costs on public companies, and deter private companies from going public.
Nasdaq laid out its proposal in december which would require listed companies to have a director who identifies as a woman and identifies as an underrepresented or LGBT minority. Foreign companies or smaller companies would have more flexibility and could meet these requirements with two women directors.
Companies that do not meet the requirements would not be subject to downgrade if they offer a public explanation of why they could not meet the targets.
However, senators say in their letter that board members should be chosen for “merit and ability to serve in corporate performance,” adding that the proposal “requires prioritizing a concept of diversity strictly defined in the composition of the board above merit “.
“This weakens shareholders’ rights by unbalancing the proper expectation that a company’s board will serve the best interests of the corporation and its shareholders by complying with all applicable laws and maximizing returns, ”they wrote.
“While we believe that U.S. companies benefit from tips that avoid group thinking and offer diverse perspectives and praise companies that seek to increase diversity among their boards, we do not believe the NASDAQ should use its authority. almost regulatory to impose social policies, “the senators added.
In a statement to The Hill, Nasdaq spokesman Joseph Christinat said “our proposal is a market-led solution that should simplify and standardize disclosure requirements, to avoid the kind of regulation the committee fears.” .
The proposal came amid an expansion of “ESG investment,” which takes into account a company’s environmental, social, and governance factors.