The SEC is asking a judge to order ISS to turn over remaining records tied to how the firm made proxy recommendations and how votes were cast. The agency says its Division of Examinations sought data in March about ISS's recommendations and votes. After ISS failed to deliver the full set of materials, the SEC's Enforcement Division opened an inquiry and, on July 21, served a subpoena.
According to the filing, some records are still outstanding, even after multiple deadline extensions and numerous attempts to break the impasse. The regulator says it is still gathering facts and has not concluded that ISS violated federal securities laws.
This arrives while the Trump administration is stepping up scrutiny of proxy advisors, firms that supply institutional investors with research and voting advice on ballots that include director contests, pay packages for executives, and resolutions from shareholders. In December, President Donald Trump issued an executive order directing the SEC to examine its proxy-adviser rules and guidance, enforce antifraud provisions under the securities laws, and evaluate whether further disclosure and regulatory requirements are warranted. The directive explicitly cited ISS alongside competitor Glass Lewis, and the White House said the two together account for over 90% of the proxy-advisory market.
CNBC's request for comment did not receive an immediate response from ISS. The SEC wants the court to order ISS to comply with the outstanding subpoena.
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Proxy advisers sit behind the scenes, providing big investors with research and recommendations on how to vote at annual meetings. The SEC's case is about access to records and is still in the fact-finding phase, but it spotlights the mechanics of how voting advice is developed and tracked. For individual investors, it is a reminder that the plumbing of corporate voting can affect how institutions evaluate decisions at companies you may own.
