Overview
- President Donald Trump signed an executive order directing the SEC, FTC, DOJ, and Labor Department to examine the market power and practices of proxy advisors ISS and Glass Lewis.
- The SEC is instructed to review rules and guidance on proxy advice and shareholder proposals, enforce anti-fraud provisions on voting recommendations, consider investment-adviser registration, and evaluate added transparency on methodology and conflicts tied to DEI and ESG.
- The order asks the SEC to analyze whether proxy advisors enable coordinated voting that could form a shareholder “group” under Sections 13(d) and 13(g), and to scrutinize whether advisers’ reliance on non‑pecuniary factors aligns with fiduciary duties.
- The FTC, in consultation with the Attorney General, will assess possible unfair, deceptive, or anticompetitive conduct and review state antitrust probes, while the Labor Department will reassess ERISA fiduciary rules and disclosure around plan managers’ use of proxy advice.
- Legal analysts say the directive does not change rules for the current proxy season but may influence behavior and future rulemaking, as ISS and Glass Lewis—foreign-owned firms controlling over 90% of the market—face ongoing scrutiny including a Florida lawsuit and reported FTC inquiries.