SEC sues ISS to enforce subpoena over proxy-voting records

The SEC sues ISS in an effort to force the proxy adviser to comply with an administrative subpoena for records related to its voting recommendations and voting activity. For investors, the case centers on the behind-the-scenes firms that help large institutions evaluate corporate ballots, rather than an SEC finding that ISS broke securities laws.

The Securities and Exchange Commission filed the subpoena-enforcement action in the U.S. District Court for the Eastern District of Pennsylvania, according to CNBC and the Financial Times. The agency is seeking a court order requiring Institutional Shareholder Services to provide the outstanding material.

The SEC said its inquiry remains in a fact-finding phase and that it has not concluded that ISS violated federal securities laws, CNBC reported. The Financial Times likewise reported that the regulator had not accused ISS of misconduct.

Why did the SEC sue ISS?

According to CNBC, the SEC’s Division of Examinations began a review of ISS in March and sought data concerning the firm’s proxy recommendations and votes. After ISS did not produce all requested information, the SEC’s Enforcement Division opened an inquiry and issued a subpoena on July 21.

The agency said ISS continued to withhold some records after deadline extensions and attempts to resolve the dispute, CNBC reported. The court action asks for compliance with that subpoena. The available reporting does not establish the subpoena’s complete scope, whether a court will grant the SEC’s request, or how the investigation will end.

What do proxy advisers do?

Proxy advisers provide institutional investors with research and recommendations for shareholder-meeting votes, including director elections, executive-pay plans and shareholder proposals. The Financial Times reported that ISS and its main rival, Glass Lewis, also provide vote-processing services for investors.

ISS describes its stewardship services as investment-advisory services for institutional clients rather than retail investors. Its parent group, ISS STOXX, says ISS Inc. is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940.

ISS cites speech and confidentiality concerns

ISS has said it is committed to working with the SEC, but argues that the demand raises serious First Amendment concerns, the Financial Times reported. An ISS spokesperson told the newspaper that compliance could expose the company and its clients to potential retaliation over protected speech and voting decisions, and that clients expect their information to remain private.

CNBC also reported that ISS raised First Amendment concerns in correspondence with the regulator. The company did not immediately respond to CNBC’s request for comment.

Broader policy backdrop

The lawsuit arrives as the Trump administration examines proxy-adviser oversight. President Donald Trump’s December executive order directed the SEC to review its proxy-adviser rules and guidance, enforce securities-law antifraud provisions, and consider further disclosure and regulatory requirements, CNBC reported.

The order named ISS and Glass Lewis. The White House said the two firms together control more than 90% of the proxy-advisory market, according to CNBC; the Financial Times separately described them as accounting for about 90% of the market for shareholder recommendations.

There is also recent legal context. The Financial Times reported that a U.S. appeals court in 2025 affirmed a lower-court ruling that vacated prior SEC rules for proxy advisers. That decision concerned earlier rules and does not resolve the current subpoena dispute.

This story draws on original reporting from CNBC.