Enforcement to ‘Hammer’ Diversity Laggards

While hundreds of California companies have moved to comply with the state’s women on boards law, the state has not penalized nor brought any enforcement against companies that have ignored aspects of it, from neglecting to file required disclosures to failing to recruit any women.

Additionally, the data that has been published by the office of the secretary of state appears to contain numerous discrepancies compared to companies’ public filings, according to a report compiled by public company intelligence provider MyLogIQ that examines the most recent data published by the state, and compares it with regulatory filings as of March 9, 2020.

Sources say the discrepancies illustrate some of the challenges in collecting data, and regulating and enforcing issues related to board composition. For instance, wellness and supplements seller Youngevity International was identified by California secretary of state Alex Padilla’s office as having complied with the law by having a woman on the board, Michelle Wallach. Wallach had been a board member since 2011 and served as chief operating officer of the company. She is also the wife of Youngevity chairman Stephan Wallach. However, in order to comply with Nasdaq listing rules requiring that the board comprise a majority of independent directors, Wallach and another director resigned on Feb. 13, 2020. Although she remains listed on the company’s website as a board member, she is no longer a director and the company has no women on its board.