The Securities and Exchange Commission (SEC) has initiated a lawsuit against Institutional Shareholder Services (ISS) in an effort to compel the firm to provide information regarding its proxy recommendations and voting activities. This legal action follows ISS's failure to fully comply with an administrative subpoena issued by the SEC after an investigation began in March.
The SEC's inquiry aims to assess whether ISS has violated federal securities laws, although it has not yet reached a conclusion on this matter. ISS has raised concerns about First Amendment rights and potential retaliation against its clients due to the subpoena.
This lawsuit is part of a broader initiative by the Trump administration to enhance oversight of proxy advisers, which play a crucial role in guiding institutional investors on shareholder votes. The SEC's actions could lead to increased regulatory requirements for ISS and its competitors, such as Glass Lewis, who dominate the proxy-advisory market.
The outcome of this case may significantly affect the operations of proxy advisory firms and their influence on corporate governance