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SEC Launches Legal Action Against Proxy Adviser ISS Over Subpoena Compliance
Finance · Financial Conglomerates · cnbc · 2026-09-06
The SEC has filed a lawsuit against Institutional Shareholder Services to compel the firm to provide data as part of a broader regulatory crackdown on proxy advisers.
What Happened
Legal Escalation and Subpoena Enforcement: The Securities and Exchange Commission has initiated a lawsuit in the U.S. District Court for the Eastern District of Pennsylvania to force Institutional Shareholder Services (ISS) to comply with an administrative subpoena. The regulator is seeking detailed information regarding the firm's proxy voting recommendations and internal activities following an investigation launched by the Division of Examinations in March.
Regulatory Scrutiny of Proxy Advisers: This enforcement action aligns with a wider initiative by the Trump administration to increase oversight of the proxy advisory industry. An executive order signed in December specifically targeted dominant market players like ISS and Glass Lewis, directing the SEC to strengthen anti-fraud provisions and enhance disclosure requirements for these firms.
Defense and Constitutional Arguments: In response to the SEC's demands, ISS has resisted full disclosure, citing potential First Amendment concerns and the risk of retaliation against its clients. The firm maintains that the requested data could compromise the privacy and security of voting activities, leading to the current standoff with federal regulators.
Status of the Investigation: The SEC clarified that its inquiry is currently in the fact-finding phase and has not yet determined whether any federal securities laws were violated. The agency is now requesting a court order to compel ISS to produce the outstanding records, marking a significant step in the government's push to regulate the influence of proxy advisory firms.