Should the SEC Know How Shareholders Vote?

The fight over ISS is testing how far regulators should go in examining the relationship between proxy recommendations and actual investor votes.

Proxy advisers occupy an unusual position in corporate governance. They do not own the shares they analyze, elect directors themselves, or possess the legal authority of regulators. Yet firms such as Institutional Shareholder Services (ISS), and Glass Lewis provide research and voting recommendations to institutional investors that may hold shares in thousands of public companies. Their recommendations address director elections, executive compensation, shareholder proposals, mergers, proxy contests and other significant governance matters.

The influence of proxy advisers has attracted increasing government attention. In December 2025, President Donald Trump issued Executive Order 14366, specifically identifying ISS and Glass Lewis and directing federal agencies to examine the regulation and activities of proxy advisers. Among other things, the order directs the Securities and Exchange Commission to review proxy-adviser rules and guidance, enforce applicable antifraud provisions, consider increased transparency regarding recommendations, methodologies and conflicts of interest, assess investment-adviser registration and examine circumstances in which proxy advisers might facilitate coordinated voting decisions among investment managers. The administration also sharply criticized proxy advisers’ treatment of ESG and DEI issues. Those statements represent the administration’s policy position and allegations. They are not findings that ISS or Glass Lewis violated the law. [whitehouse.gov]

Against that broader political and regulatory background, the SEC is now engaged in a much more specific legal dispute with ISS. The government wants information that could allow it to examine an important part of the institutional proxy-voting system: what advice ISS provided to its clients and how those clients ultimately voted. [sec.gov], [sec.gov]

That raises a deceptively simple corporate-governance question: Should the SEC be able to see what a proxy adviser recommended and compare it with how an institutional investor actually voted?

What the SEC Is Actually Doing to ISS

The immediate SEC action against ISS is not a case alleging that ISS has already been proven to have violated securities laws. It is a subpoena-enforcement proceeding. [sec.gov]

ISS is registered with the SEC as an investment adviser. According to the SEC, its Division of Examinations began examining ISS in March 2026 and requested information relating to proxy recommendations and votes. The SEC says this information would help it evaluate ISS’s compliance with federal securities laws, including obligations applicable to registered investment advisers. [sec.gov], [sec.gov]

When ISS did not provide all of the requested information, the SEC’s Division of Enforcement became involved. The Commission issued an administrative subpoena on July 21, 2026. After ISS refused to fully comply with that subpoena, particularly with the demand for information that could connect clients with individual proxy votes, the SEC filed an action on September 4 in the U.S. District Court for the Eastern District of Pennsylvania seeking an order compelling compliance. [sec.gov], [iss-stoxx.com]

The SEC says ISS’s refusal to provide the requested material has impeded its examination and investigation. The agency also argues that it is appropriate to examine whether ISS’s proxy-voting advice might be influenced by political or policy objectives to the detriment of its clients’ interests. The SEC has not concluded that this occurred. [sec.gov], [sec.gov]

That distinction is essential. The SEC is presently seeking information to conduct an investigation. Its September 4 litigation release explicitly states that the investigation remains in the fact-finding stage and that the SEC has not concluded that any individual or entity violated federal securities laws. [sec.gov]

There Are Three Different Things Involved

One reason this controversy can be confusing is that an investor’s voting policy, a proxy adviser’s recommendation and the investor’s actual vote are not necessarily the same thing.

The process can be understood conceptually as:

Investor objectives and preferences → Voting policy → Proxy research and recommendation → Voting process → Actual investor vote

ISS says institutional investors use proxy advisers to obtain research, analysis and voting advice, and that ISS tailors its advice to clients’ expressed preferences and priorities. ISS further says that clients determine whether and how to incorporate its research into their ultimate proxy-voting decisions. [iss-stoxx.com]

That distinction matters. It would be inaccurate to assume automatically that:

ISS recommendation = institutional investor vote

An investor might reach the same conclusion independently. A client-selected voting policy might produce the result. The investor might rely significantly on ISS’s analysis. Or the investor might disagree with ISS and vote differently.

The relationship among these different steps is part of what makes the underlying information relevant to the SEC’s investigation.

Why Does the SEC Want the Actual Voting Information?

The SEC’s court memorandum describes ISS’s recommendation and vote-execution services through ProxyExchange and argues that information concerning recommendations, clients and voting is relevant to determining whether ISS is complying with federal securities laws and its obligations as a registered investment adviser. The SEC further argues that client-specific information may be important when determining whether an investment adviser has acted appropriately toward particular clients. [sec.gov], [sec.gov]

From the SEC’s perspective, looking only at what ISS recommended would not tell regulators what happened afterward. Likewise, looking only at investors’ final votes would not reveal what recommendations they received beforehand. The agency argues that the requested information would allow it to examine how ISS’s proxy-advisory and voting services operate in practice. [sec.gov], [sec.gov]

Suppose, for example, ISS recommends voting against a company’s executive-compensation proposal. The institutional investor could vote against the proposal because it independently reached the same conclusion, because its voting policy produced the same result, because it relied heavily on ISS’s analysis, or for some combination of reasons.

Looking across a large number of recommendations and votes could reveal patterns that would not be apparent from published proxy-voting guidelines alone. But even a very high correlation between ISS recommendations and client voting would not, by itself, demonstrate that ISS controls those votes or that anything improper occurred. Investors retain responsibility for their final voting decisions, according to ISS, and hire proxy advisers precisely to obtain research, advice and voting-related services. [iss-stoxx.com]

What ISS Is Objecting To

ISS’s principal objection concerns the nature and scope of the client voting information sought by the government. In its September 18 response, ISS said the SEC’s demand would require the production of millions of lines of data reflecting clients’ votes on governance and policy issues. ISS argues that the requested data would permit the government to connect institutional clients with individual voting decisions on potentially sensitive subjects. [iss-stoxx.com]

ISS argues that communications concerning clients’ voting objectives and strategies implicate First Amendment and associational interests. It also contends that government access to the information threatens the confidentiality and privacy of client voting information and could discourage clients from expressing their views freely. These are ISS’s legal and factual arguments, not conclusions that have been adopted by the federal court. [iss-stoxx.com]

ISS also characterizes the SEC inquiry as part of a broader government campaign against proxy advisers. It argues that the government lacks a legitimate investigative purpose for obtaining identifiable records of every client’s votes over nearly four years. The SEC strongly disputes that characterization and argues in its court papers that the subpoena is within its authority, that the information is relevant, and that its demand is neither unreasonably broad nor unduly burdensome. [sec.gov], [iss-stoxx.com]

The court has not yet resolved those competing arguments. It would therefore be premature either to characterize the SEC’s request as unconstitutional or to conclude that ISS has improperly withheld information the SEC is unquestionably entitled to receive.

What Is Actually Happening to Glass Lewis?

This part of the story requires particular precision because the government’s broader proxy-adviser initiative and the specific SEC proceeding against ISS are not the same thing.

Executive Order 14366 expressly identifies both ISS and Glass Lewis. The order states that the two firms together control more than 90 percent of the proxy-adviser market and directs federal agencies to undertake various reviews and investigations concerning the industry. That market-share figure and the accompanying criticism are assertions made by the administration in the executive order. [whitehouse.gov]

However, as of September 22, 2026, I have not found a publicly disclosed SEC subpoena-enforcement action against Glass Lewis comparable to the September 4 proceeding against ISS. The public SEC litigation at issue is Securities and Exchange Commission v. Institutional Shareholder Services, Inc. [sec.gov]

Therefore, saying simply that “the SEC is going after ISS and Glass Lewis” would obscure an important distinction: The Trump administration’s broader initiative expressly encompasses ISS, Glass Lewis and the proxy-advisory industry. The particular SEC subpoena-enforcement litigation now underway concerns ISS. [sec.gov], [whitehouse.gov]

Nor should the absence of a publicly identified comparable enforcement proceeding against Glass Lewis be interpreted to mean that Glass Lewis has not received any regulatory scrutiny. Those are different statements.

The Federal Scrutiny Goes Beyond the SEC

The SEC is not the only federal agency examining issues involving the proxy-advisory industry.

On August 5, 2026, the U.S. Department of Justice’s Antitrust Division withdrew a business-review letter originally issued to ISS in 1987. DOJ said ISS’s business and the proxy-advisory industry had changed significantly since the letter was issued and that the old letter did not reflect ISS’s current business practices or the Antitrust Division’s current assessment of those practices. [justice.gov]

The Justice Department specifically pointed to corporate consulting services as an aspect of ISS’s current activities that was not addressed by the original business-review letter. DOJ also cited concerns about concentration in the proxy-advisory market. [justice.gov]

But there is an important qualification. DOJ expressly stated that proxy advising is not inherently problematic and that the lawful exercise of voting rights pursuant to a proxy adviser’s recommendation does not itself raise competition concerns. Withdrawing the 1987 letter therefore should not be interpreted as a finding that following ISS recommendations is anticompetitive or illegal. [justice.gov]

The White House executive order separately directs the Federal Trade Commission, in consultation with the Attorney General, to examine possible unfair, deceptive or anticompetitive practices involving proxy advisers. It also directs the Department of Labor to address fiduciary and transparency issues involving proxy advisers and ERISA retirement plans. [whitehouse.gov]

These actions involve different statutes, agencies and theories of government authority. They should not be described collectively as an SEC prosecution of the proxy-advisory industry. What can be said is that multiple parts of the federal government are reconsidering aspects of the role proxy advisers play in securities regulation, fiduciary obligations, competition and institutional shareholder voting. [whitehouse.gov], [justice.gov]

What We Know

The political debate surrounding proxy advisers can make it difficult to distinguish established facts from allegations. At this point, several important facts are clear:

• The SEC’s Division of Examinations began examining ISS in March 2026. [sec.gov], [sec.gov]

• The SEC requested information concerning ISS’s proxy recommendations and client voting activity. [sec.gov], [sec.gov]

• The SEC issued an administrative subpoena on July 21 after ISS did not provide all the information the agency requested. [sec.gov]

• On September 4, the SEC asked a federal court in Pennsylvania to compel ISS to comply with the subpoena. [sec.gov]

• ISS is resisting production of certain identifiable client-voting information and has raised confidentiality and constitutional objections. [iss-stoxx.com]

• The Trump administration is separately pursuing a broader policy initiative expressly involving ISS, Glass Lewis and proxy advisers generally. [whitehouse.gov]

• The Justice Department separately withdrew its 1987 antitrust business-review letter involving ISS on August 5, 2026. [justice.gov]

• DOJ has also stated that proxy advising is not inherently problematic and that lawful voting pursuant to a proxy adviser’s recommendation does not itself raise competition concerns. [justice.gov]

What We Don’t Know

Several equally important questions remain unresolved:

• Whether ISS violated federal securities laws. The SEC expressly says its investigation remains fact-finding and has not reached such a conclusion. [sec.gov]

• Whether ISS recommendations improperly influence institutional investors.

• Whether political or policy considerations have improperly affected ISS recommendations to the detriment of clients. The SEC says this is an appropriate subject for investigation; it has not concluded that it occurred. [sec.gov]

• Whether frequent agreement between an ISS recommendation and an investor’s vote reflects reliance on ISS, independent agreement, implementation of a client-selected policy, or some combination of those factors.

• Whether all of the client-level information sought by the SEC is within the proper scope of its investigative authority. The SEC says it is; ISS disputes the government’s position. [sec.gov], [iss-stoxx.com]

• Whether the federal court will accept ISS’s First Amendment and other objections to the subpoena. [iss-stoxx.com]

Those unresolved questions matter because an investigation is not a finding, and a government allegation is not proof. The same principle applies to ISS’s defenses. They are arguments ISS is asking the court to accept.

Should the SEC See the Recommendation and the Actual Vote?

This is where the legal dispute becomes a broader corporate-governance question.

The SEC argues that examining information concerning ISS recommendations, clients and actual votes is relevant to determining whether ISS is complying with its obligations as a registered investment adviser. The agency contends that client-specific information may be necessary when determining whether an adviser is acting appropriately toward specific clients. [sec.gov], [sec.gov]

ISS argues that the scope of the government’s demand goes too far. It says the requested information would allow the government to identify how individual institutional investors voted on millions of shareholder decisions, including potentially contentious governance and policy matters, and that such disclosure raises First Amendment and confidentiality concerns. [iss-stoxx.com]

There is therefore an important distinction between two questions:

Should regulators be able to investigate the relationship between proxy recommendations and actual shareholder votes?

And:

How much client-specific information may the government lawfully obtain when conducting that investigation?

The first concerns the purpose of regulatory oversight. The second concerns the scope and limits of government investigatory authority. The SEC and ISS disagree on the answer. The court will determine the legal boundaries.

What Should Boards Take From This?

Corporate directors should resist the temptation to see the controversy simply as a choice between supporting regulators or supporting proxy advisers.

The underlying governance structure is more important. Management runs the business. The board oversees management and governs the corporation. Shareholders exercise ownership rights, including voting. Institutional investment managers exercise voting authority over assets entrusted to them. Proxy advisers provide research, analysis, recommendations and voting-related services. Regulators oversee compliance with applicable laws.

Proxy advisers can therefore exercise substantial influence without themselves owning the shares. ISS says it tailors advice to clients’ expressed preferences and priorities and that its clients determine whether and how to incorporate ISS research into their final voting decisions. [iss-stoxx.com]

The appropriate question is not whether ISS or Glass Lewis should be allowed to have opinions about corporate governance. Providing governance analysis and voting advice is central to their businesses.

The more important question is who ultimately makes the voting decision and whether the parties involved are meeting their respective legal and fiduciary responsibilities. That is one reason the SEC-ISS dispute matters beyond the particular subpoena.

Should the SEC Know How Investors Vote?

The most factual answer today is that the SEC says it needs information connecting ISS’s recommendations, clients and voting activity to determine whether ISS is complying with federal securities laws. ISS says the government’s demand for identifiable voting information exceeds legitimate regulatory needs and violates constitutional and confidentiality protections. Neither position has yet prevailed in court. [sec.gov], [sec.gov], [iss-stoxx.com]

The SEC unquestionably has regulatory responsibilities concerning ISS as a registered investment adviser. What remains contested is the scope of information the agency may obtain in exercising those responsibilities. [sec.gov], [sec.gov]

That question reaches beyond ISS. Proxy advisers provide research and recommendations. Institutional investment managers retain responsibilities associated with the voting authority entrusted to them. Boards remain accountable to shareholders. Regulators enforce the laws governing the system.

The current litigation could help clarify where those responsibilities intersect.

That is why SEC v. ISS matters: it could help define how far government oversight may reach into the relationship between proxy advice and institutional shareholder voting.

Primary Sources

1. U.S. Securities and Exchange Commission, SEC Files Subpoena Enforcement Action Against Institutional Shareholder Services Inc., Litigation Release No. 26632, September 4, 2026. This documents the SEC examination, administrative subpoena, federal court proceeding and the SEC’s statement that its investigation remains fact-finding. [sec.gov]

2. U.S. Securities and Exchange Commission, Memorandum of Law in Support of Its Application for an Order to Show Cause and for an Order Compelling Compliance with Administrative Subpoena, September 4, 2026. This contains the SEC’s detailed legal and factual arguments supporting the subpoena. [sec.gov]

3. ISS STOXX, ISS Challenges Unconstitutional SEC Request for Client Voting Information, September 18, 2026. This sets out ISS’s characterization of the requested information and its First Amendment, confidentiality and other objections. [iss-stoxx.com]

4. The White House, Executive Order 14366, Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors, December 11, 2025. This contains the administration’s directives concerning ISS, Glass Lewis, the SEC, FTC and Department of Labor. [whitehouse.gov]

5. U.S. Department of Justice, Antitrust Division, Justice Department Withdraws Business Review Letter Issued to Proxy Advisory Firm, August 5, 2026. This documents the withdrawal of the 1987 ISS business-review letter and DOJ’s current position on competition issues surrounding proxy advisers. [justice.gov]