Vivek Ramaswamy and Elon Musk slammed the Securities and Exchange Commission (SEC) on Thursday after a federal court overturned a decision on diversity policy.
The Fifth U.S. Circuit Court of Appeals in New Orleans struck down proposed diversity rules from Nasdaq, which mandated that listed companies either include minority and female directors on their boards or explain their absence. The court determined that the SEC lacked the authority to sanction these rules.
Musk and Ramaswamy, along with other Trump supporters, lambasted the agency following the federal appeals court decision. The duo took to social media to question the SEC’s effectiveness and accused it of political bias.
“When an agency like the SEC is so repeatedly & thoroughly embarrassed in federal court for flouting the law, it loses its legitimacy as a law enforcement body,” Ramaswamy wrote on X, previously known as Twitter.
When an agency like the SEC is so repeatedly & thoroughly embarrassed in federal court for flouting the law, it loses its legitimacy as a law enforcement body. https://t.co/au2l7akoTw
— Vivek Ramaswamy (@VivekGRamaswamy) December 12, 2024
“The SEC is just another weaponized institution doing political dirty work,” Musk posted.
The SEC is just another weaponized institution doing political dirty work https://t.co/5w9ajcS6bf
— Elon Musk (@elonmusk) December 12, 2024
The ruling said that Nasdaq’s proposed rules “compel the companies listed on its exchange to disclose information about the racial, gender, and sexual characteristics of their directors, and to have (or explain why they do not have) at least two directors who meet Nasdaq’s definition of ‘diverse.’”
“SEC approved those rules,” the court said.
“We hold, however, that the diversity rules cannot be squared with the Securities Exchange Act of 1934.”
The ruling also said “it is obviously unethical to violate the law or to disregard a contractual promise.”
“It is not unethical for a company to decline to disclose information about the racial, gender, and LGTBQ+ characteristics of its directors,” according to the court.
“We are not aware of any established rule or custom of the securities trade that saddles companies with an obligation to explain why their boards of directors do not have as much racial, gender, or sexual orientation diversity as Nasdaq would prefer.”
Earlier this year, companies have started retracting their diversity policies in response to lawsuits from shareholders and conservative groups. As legal pressures mount, particularly after the Supreme Court’s decision against race-based admissions, firms are dismantling specific diversity, equity and inclusion (DEI) initiatives and rebranding others to mitigate future legal risks.
President-elect Donald Trump has committed to dismantling “woke” ideology within the U.S. government upon his return to office. He declared his intention to appoint former SEC Commissioner Paul Atkins as the next SEC chairman, targeting the widespread integration of DEI practices established during the Biden administration.
(Featured Image Media Credit: Joe Gratz via Flickr)
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