The Securities and Exchange Commission has initiated a subpoena-enforcement lawsuit against Institutional Shareholder Services (ISS), aiming to force the prominent proxy adviser to hand over records it has withheld. The legal action underscores the Trump administration’s escalating review of firms that influence how institutional investors cast shareholder votes.
Filed Friday in the U.S. District Court for the Eastern District of Pennsylvania, the suit alleges that ISS has failed to fully comply with an administrative subpoena issued on July 21. The SEC’s Division of Examinations launched its review of the company in March, requesting data regarding ISS’s recommendations and voting activities. After ISS did not produce all requested materials, regulators escalated the matter to a formal inquiry.
According to the SEC, ISS has continued to withhold certain records despite extended deadlines and repeated attempts to resolve the dispute. However, the agency emphasized that the investigation remains in the fact-finding phase and has not determined that securities laws were violated.
ISS has challenged the subpoena, arguing in correspondence with the SEC that it raises First Amendment concerns and could expose both the firm and its clients to retaliation related to their voting activity. A representative for ISS did not immediately respond to requests for comment.
The lawsuit occurs within a broader federal effort to tighten oversight of proxy advisers. In December, President Donald Trump signed an executive order directing the SEC to evaluate its rules and guidance regarding these firms, enforce antifraud provisions, and consider new disclosure requirements. The order specifically identified ISS and Glass Lewis as the dominant players in the industry, noting that they collectively control more than 90% of the proxy-advisory market.
ISS is registered with the SEC as an investment adviser. The regulator is asking the court to issue an order requiring the firm to comply with the outstanding subpoena.
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