The Securities and Exchange Commission’s new Diversity rule

On August 6, 2021 the Commission voted, by split vote, to require Nasdaq companies to have a least two diverse members on their corporate boards. One Board member must be a women, the other must self-identify under certain rules regarding gender and racial characteristics and LBGTQ+ status. Can you imagine??? There are so many problems with this new requirement I have trouble arranging my thoughts, but here goes:

1. Government telling companies how to run their businesses. Corporate boards are tasked with governance and oversight. Obviously very important and requiring of vast knowledge and experience, and–connections to industry leaders, policy makers, international business experts and capable of the governance role.

2. Diversity diminishes merit. The two concepts cannot co-exist. If a company wants to be highly successful, then the company must employ top talent regardless of gender or race. Investors sink their money in companies with top talent, regardless of gender or race. There is absolutely no empirical study or logic that proves a diverse team is better. None!!!! The NBA is an excellent example, the best basketball players are in that league. There is not a diverse collection of players, blacks represent almost 76% of the current players.

Forcing quotas is wrong and has been proven wrong for 50+ years. In this instance, it assumes all women will act different than men and that people of color will govern differently than whites. Where is that data?? I think it is insulting to women and minorities. Where is the fairness based on merit?? There may be a Nasdaq listed company with an all minority board or all women. Is that company going to add two white men. That is ridiculous.

The US must have a strong economy. It is imperative for global political reasons. Our economy is driven by the outstanding companies located within our shores. Merit is the fundamental principle for excelling in business and finance. The engine of our economy is the investment world. Investment $$$ must go to the best ideas, products, and teams. Diversity is not part of that equation.