Zinger Key Points
- The Fifth Circuit Court ruled that the SEC exceeded its legal authority by enforcing identity-based quotas on corporate boards.
- Elon Musk called the SEC a “weaponized institution” and accused it of engaging in political activities.
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Entrepreneur Vivek Ramaswamy, who will lead a new "Department of Government Efficiency" in Donald Trump‘s administration joined Tesla CEO Elon Musk in sharply criticizing the SEC following a federal court decision.
The Fifth Circuit Court ruled that the SEC acted unlawfully in approving Nasdaq's diversity quota policy, a move that critics argue represents government overreach.
Ramaswamy's pointed criticism came in response to a tweet summarizing the court's decision.
"When an agency like the SEC is so repeatedly & thoroughly embarrassed in federal court for flouting the law, it loses its legitimacy as a law enforcement body,” he said.
The court's ruling, authored by Judge Andrew Oldham, deemed the SEC's approval of Nasdaq's policy as exceeding its legal authority.
The policy required corporate boards to meet diversity quotas based on race, sex, sexual orientation and gender identity—or provide written explanations for failing to comply.
The court's opinion pointed out that the SEC's mandate is to ensure fair and honest markets, not to enforce politically motivated identity politics.
Musk added to the chorus of criticism, replying to a tweet by Senator Mike Lee (R-UT), who labeled the SEC as an "independent commission" that "cannot be trusted."
Musk described the SEC as "just another weaponized institution doing political dirty work."
This backlash against the SEC coincides with the announcement of SEC Chair Gary Gensler's resignation, effective Jan. 20, 2025, as President-elect Donald Trump prepares to take office.
Gensler, who was appointed by President Biden in April 2021, has faced significant criticism for his regulatory approach, particularly toward cryptocurrencies.
During his tenure, Gensler likened the crypto industry to the "Wild West" and pursued aggressive enforcement actions against major players like Coinbase COIN and Binance, accusing them of operating unregistered securities exchanges.
While Gensler emphasized investor protection and market integrity, critics argued that his actions stifled innovation and failed to provide clear regulatory guidelines.
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