Republican members of the Senate Banking Committee told the Securities and Exchange Commission to reject a Nasdaq proposal allowing it to require listed companies to publicly disclose the gender and racial diversity of their boards and eventually to have at least two diverse directors, citing a connection between diverse boards and corporate performance.
In a letter sent Friday to acting Chairwoman Allison Herren Lee, Republican members of the committee said: "While we think America's corporations benefit from boards that avoid groupthink and offer a diversity of perspective, and commend firms that look to increase diversity among their boards, we do not think Nasdaq should be using its quasi-regulatory authority to impose social policies."
Among the concerns they cited was whether the proposed rule would advance investor protection or serve the public interest, or is consistent with securities laws.
"It interferes with a board's duty to follow its legal obligations to govern in the best interest of the corporation and its shareholders. It violates central principles of materiality that govern securities disclosures, and finally, it harms economic growth by imposing costs on public corporations and discouraging private corporations from going public," the letter said.
