SEC seeks court order to compel ISS to release proxy voting data

The U.S. Securities and Exchange Commission (SEC) has filed an enforcement action in federal court to compel proxy advisory firm Institutional Shareholder Services (ISS) to hand over detailed client-level voting data. The investigation, which began in March 2024, seeks to determine if ISS is adhering to securities laws and fulfilling its fiduciary duty to provide advice in the best interests of its clients.

ISS has resisted the administrative subpoena, arguing that the requested records are proprietary and that producing them would be overly burdensome. The firm has also invoked First Amendment protections, suggesting that its proxy recommendations constitute protected speech. ISS stated that complying with the demand could expose its clients to potential retaliation for their voting decisions on matters of public importance.

The SEC's move follows a December 2024 executive order from President Donald Trump, which directed federal agencies to scrutinize proxy advisers for allegedly advancing political agendas through environmental, social, and governance (ESG) policies. The regulator maintains that its probe is intended to ensure that voting advice influencing trillions of dollars in shareholder decisions is not driven by undisclosed political or policy aims that could undermine investor interests.