In an unexpected one-two punch, the FTC is investigating proxy advisory firms ISS and Glass Lewis for potential antitrust violations, while the White House explores an executive order that could restrict these firms and limit how major index-fund managers vote.
Why it matters: ISS and Glass Lewis dominate the proxy advisory market, providing voting recommendations to institutional investors on everything from executive compensation to environmental policies. The proposed measures could reshape U.S. corporate governance by reducing the influence of major asset managers and potentially shifting power back to individual shareholders and company boards.
What's on the table:
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Draft proposals could ban proxy firms from making recommendations on companies that have paid them for consulting work, or bar them from issuing shareholder guidance altogether.
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Limits on how index-fund giants like BlackRock, Vanguard, and State Street exercise their voting power (such as requiring them to mirror votes in line with clients who choose to vote).
The backstory: Critics—including Elon Musk and JPMorgan CEO Jamie Dimon—have accused proxy advisors of wielding outsized influence over shareholder decisions and championing ESG initiatives misaligned with shareholder value.
What they're saying: ISS defended its track record, stating it operates transparently under SEC oversight. Glass Lewis said corporate governance issues are better handled through regulatory processes rather than executive orders.
The bottom line: This is the latest in a salvo of attacks on proxy advisors in recent weeks. Although it’s unlikely that an executive order would have any direct impact on how proxy advisors operate, the current administration has repeatedly used executive orders to support messaging or influence behavior outside of traditional legal channels.
