Who is Edward Jay Blum the plaintiff against the NASDAQ Board diversity listing rule?
Oral arguments in AFFBR vs. SEC are taking place tomorrow morning but who really is the plaintiff?
On August 9, 2021, Alliance for Fair Board Recruitment, AFFBR, filed a Petition for Review in the United States Court of Appeals for the Fifth Circuit seeking a review of the approval by the Securities and Exchange Commission (SEC) of the corporate board diversity quotas proposed by the Nasdaq stock exchange. This is one case against Board diversity efforts among several others (see my previous post on legal challenges to date). The oral arguments for Alliance for Fair Board Recruitment v. SEC are taking place in the United States Court of Appeals for the Fifth Circuit this Monday at 9 a.m. (case 21–60626 — see link). AFFBR is represented by Boyden Gray & Associates, a law and strategy firm in Washington, D.C., focused on constitutional and regulatory issues founded by a former Bush White House General Counsel.
Who really is AFFBR? And what are his motives?
On paper, AFFBR, is a Texas-based nonprofit with anonymous members who claim to be aspiring directors or shareholders of companies subject to the now repealed SB 826 and AB 979 as well as the NASDAQ listing rule. You can read the opening brief here.
In reality, AFBBR is Edward Jay Blum, most famously as the executive director of Students for Fair Admission (SFFA) and Project on Fair Representation, which spearheaded an effort to end affirmative-action admissions policies at Harvard University. Blum self-describes as a “politically conservative legal strategist known for his activism against affirmative action based on race and ethnicity”. His deep-pocketed donors included conservative groups according to IRS filings. The National Center for Public Policy Research, a conservative think-tank whose President has claimed that global warming is a religion, is a co-petitioner in the case.
Blum’s expressed motive to push back on diversity efforts is a belief in the false narrative of American meritocracy. In “An Inconvenient Minority: The Attack on Asian American Excellence and the Fight for Meritocracy” Blum is quoted as saying : “well that’s sign that other races need to step up and do better … I believe competition makes you stronger”. But we can also assume that Blum fears that competent white men might be ‘disfavored’ to make room for diverse students or Board members.
Proponents of the new listing rule argue that Boards, not unlike Ivy League Schools, have had historically a recruitment process which is much more “cliquish” than meritocratic or competitive. Leveling the playing field is necessary to ensure fairness and a true meritocracy. You can read here the Amicus Brief submitted by the ACLU.
And beyond this argument, a diverse board yield multiple benefits, including better decision-making to inform key governance issues, being at the forefront of the environmental, social and governance (ESG) agenda, more equitable representation of shareholder and stakeholder needs, better alignment with the company’s employee, customer and supplier base, and dynamic skills, backgrounds and perspectives to anticipate and respond to changing market and consumer trends.
Despite Blum’s claim that it is discriminatory and therefore unconstitutional, the NASDAQ rule is introducing fairness in Board recruitment but also good governance (see also LGBTQ+ Inclusion in the Boardroom Is Simply Good Governance).