Federal court rejects Nasdaq’s diversity rules [Video]

A federal appeals court on Wednesday ruled that Nasdaq can’t impose rules on companies listed on the exchange that aim to promote diversity by requiring listed firms to have women and minority directors on the boards or explain why they don’t.

The U.S. Fifth Circuit Court of Appeals, which is based in New Orleans and has a conservative majority, issued a 9-8 ruling that found the rules approved by the Securities and Exchange Commission (SEC) violated federal securities law.

The decision comes as a significant legal victory for critics of policies meant to boost corporate racial and gender diversity.

The rules were challenged by a conservative think tank known as the National Center for Public Policy Research and the Alliance for Fair Board Recruitment, a group founded by Edward Blum, who led the successful Supreme Court challenge against race-conscious college admissions policies.

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“SEC has …