The Securities and Exchange Commission has escalated its standoff with Institutional Shareholder Services, filing a subpoena enforcement action in the Eastern District of Pennsylvania on September 4, 2026. The move comes after ISS refused to fully comply with an administrative subpoena issued on July 21, 2026, as part of a broader examination that kicked off in March.
The SEC wants a federal court to force ISS to hand over core operational documents, including its proxy voting recommendations, internal methodologies, and compliance records. ISS has pushed back, arguing that full compliance could violate its First Amendment rights and expose both the firm and its clients to retaliation over sensitive corporate voting matters.
What the SEC is after
ISS isn’t some niche consultancy. Along with its main competitor Glass Lewis, the firm controls roughly 90% of the proxy advisory market. That means when ISS issues a recommendation on how shareholders should vote on executive pay, board members, or mergers, the ripple effects touch trillions of dollars in institutional assets.
The SEC’s investigation is focused on whether ISS has been operating in compliance with federal securities laws in its capacity as a registered investment adviser. The subpoena specifically targets the methodology behind its voting recommendations, the kind of proprietary information that proxy advisory firms guard closely.
ISS has cooperated with some of the SEC’s requests. But it drew a line at handing over certain documents, raising two main objections. First, the firm claims its proxy recommendations constitute protected speech under the First Amendment. Second, it argues that disclosing detailed client voting information could trigger backlash from corporations unhappy with how those votes were cast.
The SEC, for its part, has characterized this as a straightforward factual investigation. No allegations of misconduct have been leveled against ISS at this point.
ISS has been here before
This isn’t the first time ISS has found itself on the wrong side of an SEC action. Back in 2013, the firm paid a $300,000 penalty to settle charges that it had failed to maintain adequate safeguards around client proxy voting information.
Under the Trump administration, regulatory scrutiny of proxy advisory firms has intensified, driven partly by corporate lobbying groups that have long argued ISS and Glass Lewis wield too much unchecked influence over shareholder votes. Companies have complained for years that the firms’ recommendations, particularly on issues like executive compensation and environmental disclosures, can effectively override management’s preferences without sufficient accountability.