The Securities and Exchange Commission has sued Institutional Shareholder Services, asking a federal judge to force the Rockville, Maryland-based proxy advisory giant to comply with a subpoena demanding four years of client-identifying voting records. The agency filed the subpoena-enforcement action on September 4 in the U.S. District Court for the Eastern District of Pennsylvania, escalating a monthslong standoff over data from ISS's proxy recommendations and vote tracking.
According to CNBC, the SEC's Division of Examinations began reviewing ISS in March and later requested data tied to the firm's recommendations and votes. When ISS did not turn over everything requested, the SEC's Enforcement Division opened its own inquiry, and the commission issued a formal subpoena to ISS on July 21. The SEC's own filing specifies the case is docketed as No. 2:26-mc-00078 and seeks vote-level data from ISS's ProxyExchange database going back four years.
ISS has withheld some records despite extended deadlines and repeated efforts to resolve the dispute, the outlet reports, and has still not produced all the material the SEC requested. In responding to the subpoena, ISS argued the demand raises First Amendment concerns and could expose the firm and its clients to retaliation over their voting activity, per correspondence described in the reporting. The SEC, for its part, says it has not concluded that ISS violated federal securities laws and describes its investigation as still in the fact-finding stage; it is simply asking the court to order ISS to comply with the outstanding subpoena.
A Firm Built on Advising Big Investors, Now Under the Microscope
ISS is registered with the SEC as an investment adviser and has held that status since 1997. The firm and its rival, Glass Lewis, provide institutional investors with research and recommendations covering board elections, executive compensation, and shareholder proposals, and together the two control more than 90% of the proxy-advisory market, according to the White House. ISS operates as a wholly owned subsidiary of German stock exchange operator Deutsche Börse AG, a corporate structure that has drawn particular attention given the political framing of the federal campaign against it.
This is not the first time ISS has faced SEC scrutiny over the confidentiality of client voting data. In May 2013, the firm settled SEC administrative charges by paying a $300,000 penalty and agreeing to retain an independent compliance consultant after an employee was found to have leaked confidential proxy voting data belonging to more than 100 institutional clients to a proxy solicitor in exchange for meals and event tickets.
An Executive Order Sets the Stage
The lawsuit is the latest step in a broader effort by the Trump administration to tighten oversight of proxy advisers. President Trump signed an executive order in December 2025 directing the SEC to review its rules and guidance on proxy advisers, and that order — Executive Order 14366, titled Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors — specifically named ISS and Glass Lewis and directed federal agencies to investigate proxy advisers over recommendations tied to diversity, equity, and inclusion and environmental, social, and governance factors. The order also directs the SEC to enforce securities-law antifraud provisions and to consider additional disclosure and regulatory requirements for the industry.
The SEC's subpoena fight arrives without the benefit of a fresh rulemaking to lean on. A federal court ruling affirmed by the D.C. Circuit Court of Appeals in July 2025 vacated the SEC's prior rules governing proxy advisers, limiting the agency's ability to mandate pre-dissemination disclosure requirements, according to the Financial Times. That has left the commission relying on its administrative examination and subpoena powers as an investment adviser regulator rather than new regulations to press its case against ISS.
According to the Securities and Exchange Commission, Form N-PX is an annual report of proxy voting records that institutional investment managers must file. The Securities and Exchange Commission said rules governing proxy-voting information reported on Form N-PX were implemented in August 2024, with institutional investment managers and funds required to file their first amended-form reports that month. The Securities and Exchange Commission’s regulatory history includes a September 29, 2021 proposed rule titled Enhanced Reporting of Proxy Votes by Registered Management Investment Companies and Certain Other Listed Entities. The Securities and Exchange Commission also proposed amendments to its rules governing proxy-voting advice on November 17, 2021.
Pressure Coming From Every Direction
The SEC subpoena fight is only one front in a coordinated push against ISS and Glass Lewis. In August, the Justice Department announced plans to rescind a 1987 approval letter that had shielded ISS's proxy voting recommendations from antitrust scrutiny, citing growing concerns about market concentration in the proxy advisory industry, as Hoodline detailed in its report on regulators squeezing the Wall Street proxy duopoly. Separately, the Department of Labor issued Technical Release 2026-01 in April, establishing that proxy advisory firms meet the criteria to be treated as ERISA investment advice fiduciaries when they issue voting recommendations — a designation that exposes them to heightened liability under federal retirement law.
State governments have joined the fray as well. Florida officials filed an enforcement action against ISS and Glass Lewis in November 2025, accusing the firms of leveraging their market dominance to force ESG mandates onto corporate governance, a case Hoodline covered when Florida's attorney general threatened further legal action. In its own litigation against Texas, ISS has argued that its proxy advisory business is governed by a comprehensive federal regulatory regime under the Investment Advisers Act — an argument the firm has used to fend off state-level restrictions even as it now resists the SEC's federal demands for its client data.
ISS did not immediately respond to CNBC's request for comment on the new lawsuit. The case adds a fourth simultaneous pressure point — alongside the SEC, DOJ, and Department of Labor actions, plus ongoing state litigation — testing how far the proxy advisory giant can push back against a government-wide effort to unwind its influence over how billions of shares get voted each year.
