“Congress cannot divest its lawmaking power to an administrative agency working with a quasi-public exchange to govern how boards of directors are constituted,” the lawsuit argues.
According to the NCLA, diversity rules violate the due process and equal protection rights of Americans, give SEC “suspending and dispensing powers and constitute prerogative warrants and orders in violation of the U.S. Constitution,” the organization said.
The SEC is likely to defend against the lawsuit vigorously. The Biden administration and Gensler have both made diversity, equity and inclusion top priorities.
But the NCLA, founded just over three years ago by Columbia University law professor Philip Hamburger with the mission of “reining in unlawful and unconstitutional agency power,” has had some success in its short history. For instance, it has filed relatively successful amicus briefs in the U.S. Supreme Court to curtail the SEC’s use of administrative law judges, which the NCLA has argued allow the agency to avoid juries, due process of law and constitutionally protected procedural rights that should be afforded in federal court.