SEC Sues ISS in Proxy Adviser Crackdown Under Trump
The SEC has filed suit against Institutional Shareholder Services to enforce a subpoena, escalating the Trump administration's scrutiny of proxy advisers.
The Securities and Exchange Commission sued Institutional Shareholder Services on Tuesday, moving to enforce a subpoena against one of the most powerful proxy advisory firms in the country as the Trump administration intensifies its oversight of the industry. The legal action marks a significant escalation in the administration's effort to rein in firms that wield outsized influence over how institutional investors cast corporate votes.
ISS and its chief rival, Glass Lewis, collectively guide voting decisions for trillions of dollars in institutional assets, giving them substantial sway over executive pay packages, board elections, and shareholder resolutions at publicly traded companies. Critics — particularly on the political right — have long argued that these firms push environmental, social, and governance agendas that do not necessarily align with the financial interests of ordinary shareholders.
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The SEC's decision to pursue a subpoena enforcement action suggests ISS has not complied with an earlier agency demand for information, raising the legal stakes considerably. By escalating to the courts, regulators signal they intend to compel disclosure regardless of ISS's objections, a move that could set a precedent for how the government engages with the broader proxy advisory sector going forward.
The lawsuit fits a broader pattern of the Trump administration revisiting rules and relationships that previous regulators had established with Wall Street gatekeepers. Proxy advisers gained a degree of regulatory clarity under prior SEC guidance, but that framework is now under renewed pressure as officials reassess the role these firms play in American capital markets.
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