The U.S. Department of Justice withdrew a 1987 approval letter for Institutional Shareholder Services on Wednesday, reopening antitrust scrutiny of the two firms that dominate how America's mutual funds and pension plans vote at corporate annual meetings. ISS and rival Glass, Lewis & Co. together control more than 90 percent of the U.S. proxy advisory market, a duopoly that has drawn complaints for years from conservative groups and Republican political leaders, including President Trump, who has called for an antitrust probe of both firms.
According to Reuters, a Justice Department official said the agency now has significant antitrust concerns over consolidation in the proxy-advisory industry and plans to rescind the decades-old guidance that had shielded ISS's voting recommendations from scrutiny. ISS advises investors on corporate governance and shareholder votes, while Glass Lewis performs a similar function for a separate slice of institutional clients, helping both firms guide how mutual funds and other large investors vote at corporate elections. An ISS spokesperson did not immediately respond to Reuters' request for comment.
A 1987 Rule Meets a Very Different ISS
The original 1987 business review letter had cleared ISS's model because the firm was expected to stick to basic corporate governance advice and vote recommendations, according to the U.S. Department of Justice. The department said that premise no longer holds, since ISS has since expanded into corporate consulting and operational advice for many of the same companies whose shareholder votes it evaluates. That expanded footprint, layered on top of the sheer size of the market ISS and Glass Lewis dominate, is what the department cited in explaining Wednesday's withdrawal.
Trump's Executive Order Set the Stage
Wednesday's action follows an executive order President Trump signed on December 11, 2025, titled 'Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors,' which directed the DOJ, FTC, SEC and Department of Labor to increase oversight of proxy advisors that prioritize diversity, equity and inclusion or environmental, social and governance proposals over investor returns, according to the White House. Proxy advisers broadly support environmental, social and governance proposals, a pattern that has fueled years of criticism from conservative groups and Republican lawmakers.
The Department of Labor followed in April with guidance from its Employee Benefits Security Administration establishing that proxy advisory firms meet the legal criteria for investment advice fiduciaries under the Employee Retirement Income Security Act when they issue vote recommendations, according to the U.S. Department of Labor. That designation exposes ISS and Glass Lewis to a new layer of fiduciary-law liability on top of the antitrust pressure now coming from the Justice Department.
Courts Push Back on State-Level Crackdowns
Not every regulatory attempt to rein in the firms has succeeded. Federal judges in Kansas and Indiana issued separate rulings in late June blocking state disclosure laws that would have required proxy advisors to produce financial analyses whenever they recommended a vote against company management, according to Ballotpedia. Both judges held that the mandates amounted to unconstitutional viewpoint discrimination under the First Amendment, underscoring the limits of state-level efforts to police the two firms.
Foreign and Private-Equity Ownership Draws Scrutiny
Ownership structure has become part of the political argument against the duopoly. ISS became wholly owned by German stock exchange operator Deutsche Börse AG in March, while Glass Lewis has been controlled by Toronto-based private equity firm Peloton Capital Management and Canadian executive Stephen Smith since 2021, according to Responsible Investor. That foreign and private-equity control is directly referenced in the title of Trump's December executive order, which frames the firms as foreign-owned.
Wall Street Firms Start Building Their Own Tools
Some of the duopoly's biggest clients are already moving on. JPMorgan Chase & Co. announced in January that it would stop relying on third-party proxy advisors altogether, shifting instead to proprietary artificial intelligence tools and internal research for its own voting decisions, according to a summary of the shift published on Wikipedia. Glass Lewis itself is adapting: the firm said in late 2025 that it will phase out its standardized "benchmark" voting policy by 2027 in favor of AI-assisted custom models that let institutional clients build individualized voting frameworks, per Skadden, Arps, Slate, Meagher & Flom LLP.
A Regulatory Pendulum Years in the Making
Wednesday's DOJ move is only the latest swing of a pendulum that has been in motion for years. The U.S. Court of Appeals for the D.C. Circuit noted in a July 2025 ruling that the SEC first adopted rules in 2020 treating proxy voting advice as a form of proxy solicitation subject to corporate review, only for the SEC to roll back key pre-dissemination disclosure requirements under the Biden administration in 2022. Congress had already been circling the issue before that: Republicans on the House Judiciary Committee opened an inquiry in August 2023 into whether ISS and Glass Lewis colluded with institutional investor coalitions like Climate Action 100+ to push decarbonization mandates on public companies.
For now, the practical effect of Wednesday's withdrawal is legal rather than immediate: it strips away the antitrust safe harbor ISS had relied on since 1987, opening the door to further Justice Department action without announcing a lawsuit. Whether that leads to formal charges against ISS or Glass Lewis remains to be seen, but the combination of DOJ scrutiny, Labor Department fiduciary rules, a hostile executive order and courts striking down some state efforts leaves the two firms facing pressure from nearly every direction of government at once.
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