Vivek Ramaswamy and Elon Musk on Thursday criticized the Securities and Exchange Commission (SEC) after a federal court overturned a decision on diversity policy.
The Fifth Circuit Court of Appeals in New Orleans has rejected Nasdaq's proposed diversity rule that would have required publicly traded companies to include minority and female directors on their boards or explain their absence. The court held that the SEC did not have the authority to authorize these rules.
Musk and Ramaswamy, along with other Trump supporters, condemned the agency following the federal appeals court ruling. The two took to social media to question the SEC's effectiveness and accuse it of political bias.
“When an agency like the SEC is repeatedly and thoroughly humiliated in federal court for disregarding the law, it loses its legitimacy as a law enforcement agency,” Ramaswamy said. I wrote On X, formerly known as Twitter.
When an agency like the SEC is repeatedly and thoroughly shamed in federal court for ignoring the law, it loses its legitimacy as a law enforcement agency. https://t.co/au2l7akoTw
— Vivek Ramaswamy (@VivekGRAmaswamy) December 12, 2024
“The SEC is just another weaponized agency doing political dirty work,” Musk posted.
The SEC is just one weaponized agency that does political dirty work https://t.co/5w9ajcS6bf
— Elon Musk (@elonmusk) December 12, 2024
The ruling stated that Nasdaq's proposed rules would require “publicly traded companies to disclose information about the race, gender, and sexual characteristics of their directors and to have at least two directors who meet Nasdaq's standards (or to explain why they do not have one.” “It requires an explanation.” Definition of “diversity”.
“The SEC has approved these rules,” the court said.
“However, we believe that the diversity rules are not consistent with the Securities Exchange Act of 1934.”
The ruling also stated that “violating the law or ignoring contractual promises is clearly unethical.”
The court held that “it is not unethical for a company to refuse to disclose information about the race, gender, or LGTBQ+ characteristics of its directors.”
“We are unaware of any established rules or customs in securities trading that require companies to explain why their boards of directors are not as diverse in race, gender, and sexual orientation as Nasdaq would like.”
Earlier this year, companies began rolling back diversity policies in response to lawsuits from shareholders and conservative groups. As legal pressure mounts, particularly after the Supreme Court's ruling against race-based admissions, companies are discontinuing certain diversity, equity, and inclusion (DEI) initiatives and adopting others to reduce future legal risks. The initiative is rebranding. (Related: 5 government programs where Musk's Office of Government Efficiency could run into trouble)
President-elect Donald Trump has vowed to dismantle “woke” ideology within the U.S. government once he returns to office. He announced his intention to appoint former SEC Commissioner Paul Atkins as the next SEC Chairman, with the goal of broadly integrating DEI practices established under the Biden administration.
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