On December 11, 2025, President Trump signed an executive order entitled “Protecting American Investors From Foreign-Owned and Politically-Motivated Proxy Advisors.” Directly referencing Institutional Shareholder Services (ISS) and Glass Lewis, the order is predicated on the premise that “proxy advisors regularly use their substantial power to advance and prioritize radical politically-motivated agendas — like ‘diversity, equity, and inclusion’ and ‘environmental, social, and governance’ — even though investor returns should be the only priority.” A Fact Sheet released by the administration reinforces the background and purposes of the order. The executive order itself directs the Chairman of the SEC, the Chairman of the Federal Trade Commission and the Secretary of Labor to take a number of rulemaking and investigative actions. With respect to the SEC, the agency is ordered, among other things, to:
- Enforce the antifraud provisions of the federal securities laws with respect to material misstatements or omissions contained in proxy advisors’ proxy voting recommendations;
- Assess whether to require proxy advisors whose activities fall within the scope of the Investment Advisers Act of 1940 to register as registered investment advisers; and
- Direct the SEC staff to examine whether the practice of registered investment advisers engaging proxy advisors to advise on (and following the recommendations of such proxy advisors with respect to) non-pecuniary factors in investing, including, as appropriate, “diversity, equity, and inclusion” and “environmental, social, and governance” factors, is inconsistent with their fiduciary duties.
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