The Securities and Exchange Commission has filed a federal lawsuit seeking to force Institutional Shareholder Services, Inc. to hand over records in an examination of the proxy advisory firm’s business and voting practices.
The regulator filed the case on September 4, 2026, in the US District Court for the Eastern District of Pennsylvania. It is seeking a judicial order requiring ISS to comply with an administrative subpoena issued on July 21, 2026. The SEC said in its filing that ISS had “unreasonably refused” to produce the requested documents despite multiple efforts to settle the dispute without litigation.
The action places a prominent intermediary in corporate governance under heightened regulatory pressure. ISS and Glass Lewis are the two dominant proxy advisory firms. Together, they control roughly 90% of the proxy advisory market and advise institutional shareholders on votes ranging from executive pay packages to board elections.
ISS is registered as an investment adviser, placing it within the SEC’s regulatory jurisdiction. The agency’s Division of Examinations began reviewing ISS’s operations in March 2026 to assess whether its proxy recommendations and voting activities comply with federal securities laws.
The SEC said the examination includes whether ISS is meeting its fiduciary duty to provide advice in its clients’ best interests. The agency has described the matter as a straightforward factual investigation. It has also explicitly said the review has yet to determine whether any violations occurred, and no misconduct allegations have been levelled against ISS at this point.
The subpoena seeks information central to ISS’s operations. According to the filing, the requested material includes internal methodologies, communications concerning particular proxy recommendations, compliance records and four years of client-level voting information.
ISS has argued that its proxy recommendations are protected speech under the First Amendment. It has also said disclosure of detailed client voting information could prompt backlash from corporations dissatisfied with how votes were cast. ISS maintains that clients provide such information expecting it to remain confidential.
The court case does not resolve those arguments. It asks the court to decide whether ISS must comply with the SEC’s demand for records. The specific documents that ISS has withheld, and the reasons it determined they should not be produced, remain unknown.
The dispute comes after President Donald Trump issued an executive order in December directing the SEC chairman to scrutinise proxy advisers, including ISS and Glass Lewis, over guidance involving environmental, social and governance issues and diversity, equity and inclusion policies. The regulator said it is within its oversight responsibilities to examine whether proxy-voting advice is influenced by political or policy objectives at the expense of clients.
The examination therefore reaches beyond the mechanics of a subpoena fight. Proxy advisers can influence how large shareholders exercise voting rights at public companies, giving their research and recommendations substantial weight in contests over directors, pay and corporate policy. The SEC’s request for internal methods, recommendation-related communications and client voting records addresses how that influence is exercised and supervised.
ISS has previously settled an SEC matter. In 2013, the company paid a $300,000 penalty over improper sharing of confidential information and agreed to retain a compliance consultant.
The present examination has no stated outcome. It remains unclear whether the court will grant the SEC’s motion, whether ISS’s speech and confidentiality arguments will prevail, or whether the company will voluntarily provide the material. It is also unknown whether the review will lead to findings of violations or extend to Glass Lewis or other proxy advisory firms.
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