Nasdaq Adopts Mob-Style Tactics To Push Woke Agenda

The directors of the Nasdaq, once an entirely innocuous governing board for a stock exchange, have waded deep into public policy, seeking to force corporations to establish board-member quotas for women and for certain preferred minority groups. Because the effort requires U.S. Securities & Exchange Commission (SEC) approval and is offered with essentially no credible relevant evidence of its value to corporations – much less its necessity – it is quite unconstitutional.

Scott Shepard

Scott Shepard

In these grim, evil days, that of course does not ensure that the SEC will reject it as unconstitutional: the vast conspiracy to destroy basic American liberties becomes more apparent by the day (as does the source of the left’s pre-election panic at the thought of not controlling the courts, where its schemes should in a sane world fall like birds traversing a wind farm). But there are special characteristics of the Nasdaq power grab that bear special consideration, as they appear to serve as a template (or at least a prime example) upon which the larger attempt on the life of the Republic is likely to proceed.

My colleague at the Free Enterprise Project, Justin Danhof, wrote recently about many of fatal flaws of the proposal, and we submitted a comment to the SEC detailing the most important of these. It would be unconstitutional for the SEC to approve this rule, under a nearly century-old precedent that establishes that public organizations cannot bless or enforce private activity that would constitute unconstitutional discrimination if undertaken by government actors. This is particularly true because the research used to justify discrimination on the basis of race, sex, and sexual orientation – which is what these quotas are – neither says what Nasdaq says it does nor would be constitutionally (or logically) sufficient even if it did.

It is also incoherently vague in ways that would unnecessarily lead corporations into bizarre territory, as minority status is established by the assertion of the director candidate, and categories that satisfy the quotas include, among others, “member of the queer community,” which the rule does not even attempt to define. (This lets alone entirely the appalling prospect of companies wrestling with questions such as “how black is black enough” for mixed-race candidates and the question of what it does with Elizabeth Warren-type claims.) Corporations have no business involving themselves in such details of their employees’ lives, and will be legally constrained from making further inquiries in many cases.

The whole thing, then, is madness, but there’s a special horror within the madness. It arises from the genesis and structure of this rule. Nasdaq is a private company. This shouldn’t matter, for reasons just stated, but it will be used as an excuse to justify the discrimination. Additionally, to obscure the deep unconstitutionality of the proposal, Nasdaq has added a facial “out:” rather than establishing the quotas, corporations can “explain why the company does not have at least two directors on its board who self-identify in the categories listed above.” Of course, once the declaration and explanation become public, then the woke mobs will descend on the company to attack. Any sensible declaration such as “we do not believe that directors should be chosen on the basis of irrelevant surface characteristics, but instead on merit,” will be treated as direct evidence of sexism and racism, when in fact it is exactly the reverse. In fact, the way things have developed so far this year, any attempt by the company to explain and defend such a position publicly might well be treated as “hate speech,” hate now defined by the modern-day communications firms as “saying anything that might hinder our takeover of public discourse in aid of the woke agenda,” and pulled down and banned.

In other words, Nasdaq is proposing the tactics of the mob. “Nice business you have here. You don’t have to kiss our ring and institute our quotas. What a shame, though, what happened to that last company that said no. Hate to see that happening to you.”

And then there’s the Nasdaq’s concomitant “offer” of a “complimentary board recruiting solution to help advance diversity on company boards.” Of course, a corporation that does not have its quotas filled does not have to pick this “solution,” which is anyway free for the first year (analogies from teaser rates to the first free hit spring instantly to mind), but now it’s become very important to keep Nasdaq sweet, no? And right here’s this easy way to get them off your back. Just let the Godfather – no, sorry, the Nasdaq partner – take care of all this, and everything will be just fine. (As it’s not yet clear to me whether this partner organization is itself neck-deep in the woke racket, and therefore an active part of this hustle, I won’t name it here. But if it was the organization that put together Nasdaq’s shoddy and factitious argument in favor of sex- and race-discrimination, and it seems that it might well have been, then we have our answer.)

The SEC recently extended the deadline for filing comments about this proposed rule until March 11. Though the long strings of First and Fifth Amendment precedent establish the unconstitutionality of the proposed rule, and while the mob-inspired nature of the whole thing should leave all rational people reeling away in disgust, the nature of the moment is such that the comments are, right now, running heavily – but with little thoughtful exposition – in Nasdaq’s favor. And comment volume can be used by agencies to justify actions that they know to be both wrong and illegal, and certainly have been in the past. So if you get a chance, will you consider dropping a thoughtful comment of your own here to let the SEC know what you make of all this?


Scott Shepard is a fellow at the National Center for Public Policy Research and Deputy Director of its Free Enterprise Project. This was first published at Townhall Finance.

The National Center for Public Policy Research is a communications and research foundation supportive of a strong national defense and dedicated to providing free market solutions to today’s public policy problems. We believe that the principles of a free market, individual liberty and personal responsibility provide the greatest hope for meeting the challenges facing America in the 21st century.