• A federal court struck down a rule requiring Nasdaq-listed companies to disclose board diversity.
• Legal experts say the ruling won't likely impact Goldman Sachs' board diversity mandate.
• Since 2020, the investment bank has only helped take public clients with diverse boards.

Wall Street's board diversity initiatives are not dead — yet.

On Wednesday, the Fifth Circuit Court of Appeals struck down Nasdaq's efforts to push companies that want to list their stock on its exchange to diversify their boards or explain themselves. Nasdaq has said it will not appeal the decision. The Securities and Exchange Commission, which approved the Nasdaq rule in 2021, has said it is reviewing the decision.

Companies could continue to feel pressure to diversify their boards, however, from other stakeholders including shareholders and even Wall Street banks.

In 2020, David Solomon, CEO of Goldman Sachs, a top underwriter of initial public offerings, announced that the bank would start requiring the clients it helps take public to have at least one diverse board member. In 2021, the bank upped the requirement to two diverse board members, including at least one woman. It has also tasked one of its rising stars with a new role helping corporate clients find diverse board members.

Goldman declined to comment on its board diversity initiative, but legal experts say that the Fifth Circuit ruling should not impact the investment bank. That's because Wednesday's ruling, agreed to by 9 of the circuit's 17 judges, centered on the Securities and Exchange Commission's right to approve the Nasdaq's diversity rules.

The judges said the Securities Exchange Act of 1934 gives the SEC the authority to prevent fraud and promote competition — not enforce diversity disclosures.

Ann Lipton, a professor at Tulane University's law school, however, said that the ruling could still have a chilling effect on banks whose policies are often informed by federal standards.

"If those standards appear to be shifting, investment banks may alter their policies to conform," she said in an emailed statement.

Wall Street has historically been made up of mostly white men and remains so to this day. Following the death of George Floyd at the hands of police in 2020, more bank CEOs have begun personally setting goals to increase diversity at their companies, including at Morgan Stanley and Goldman Sachs.

Some Wall Street's diversity initiatives, however, have been walked back in recent months in light of an influential court ruling that significantly changed the way college campuses can use affirmative action in their admissions process. Bloomberg reported in March on investment-bank recruitment programs originally geared toward minorities that have been quietly opened to everyone.

In January, Goldman told Fortune that it had taken public 300 businesses that adhere to its diversity standards. Last year, the Goldman executive tasked with helping clients identify diverse board members told BI that she had helped facilitate 99 placements since her role was created on the heels of the bank's new diversity mandate.

"Demand was there and supply was there, there was just a market mechanism problem," Ilana Wolfe told BI at the time. "I'm most proud of being able to be that link."

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