Citywire RIA reported that the Securities and Exchange Commission has moved ahead with a more targeted inquiry into how proxy advisory firms operate, with Institutional Shareholder Services (ISS) and Glass Lewis at the center of the scrutiny. According to the outlet's summary, the two firms have faced pressure from the Trump administration, partly over their work on environmental, social and governance issues.
The current phase traces back to a December 11, 2025 executive order that named ISS and Glass Lewis and directed the SEC, the Federal Trade Commission and the Department of Labor to increase oversight of the sector. Morrison Foerster, in a client briefing, said the order asked the SEC to assess whether proxy advisers should register as investment advisers under the Advisers Act.
According to Morrison Foerster, the SEC's Division of Examinations began examining ISS in March 2026 and requested data on its proxy recommendations and votes. According to Morrison Foerster, the agency issued a formal investigative order on July 20, 2026 into potential breaches of the Advisers Act, covering its antifraud and recordkeeping rules. A day later, an administrative subpoena followed, requesting roughly four years of records on proxy recommendations and votes.
On September 4, 2026, the SEC filed a subpoena enforcement action against ISS in federal court. The Corporate Counsel blog reported that the agency sought data on all ISS clients from July 1, 2024 to February 28, 2026. ESG Today reported that ISS told the SEC the request was too burdensome and also objected on First Amendment grounds. According to The Corporate Counsel, the agency has not reached a conclusion that any person or entity broke federal securities law.
Glass Lewis said in November 2025 that it intends to register as an investment adviser, according to Carlton Fields. Morrison Foerster noted that ISS is already an SEC-registered investment adviser. An SEC filing shows that Glass Lewis withdrew an earlier SEC investment adviser registration in 2005. Latham & Watkins reported that, starting in 2027, Glass Lewis plans to shift from one house-wide voting recommendation to thematic guidelines.
Both firms hold a large share of the US market. Morrison Foerster said ISS and Glass Lewis together hold more than 90% of the US proxy advisory market. Harvard Law School Forum data cited by ESG Dive put their 2021 shares at about 48% for ISS and 42% for Glass Lewis, measured by assets under advice, which is a measure of coverage rather than revenue or assets under management.
ISS was founded in 1985, according to Wikipedia. Glass Lewis was founded in 2003 and is headquartered in San Francisco, according to its own news release, which says it serves more than 1,300 investment managers and pension funds globally. Glass Lewis was owned by Ontario Teachers' Pension Plan and the Alberta Investment Management Corp. until March 2021, when Peloton Capital Management and Stephen Smith acquired it, according to Wikiwand. PitchBook classifies Glass Lewis as private equity-backed.
The firms face other actions as well. ESG Today reported that the Texas attorney general opened a probe in 2025 into the firms over ESG and DEI advice. BCLP reported that Missouri's attorney general opened an investigation in July 2025 under state consumer protection law. An SEC filing shows that state attorneys general announced a 16-state Multistate Proxy Advisor Coalition on May 26, 2026, to coordinate enforcement. The Department of Labor issued Technical Release 2026-01 on April 1, 2026, covering ERISA fiduciaries that use proxy advisory services. Carlton Fields reported that both firms have contested the law and the SEC's actions in federal court, citing constitutional and statutory objections.
The agency has additionally withdrawn a 1987 communication that had indicated antitrust action would not be pursued against proxy advisory firms. Investment Executive reported that the retraction suggests antitrust scrutiny is possible. ESG Dive reported that ISS said it would engage constructively with the SEC, the Department of Labor and the FTC.
The sources reviewed do not report a court ruling on the subpoena enforcement action or any finding against either firm. The SEC's formal investigation and the court proceedings against ISS remain the next points to watch.