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The Securities and Exchange Commission sues Institutional Shareholder Services to compel the firm to provide proxy voting records.

The Securities and Exchange Commission filed a subpoena-enforcement action in the U.S. District Court for the Eastern District of Pennsylvania to force Institutional Shareholder Services to provide records regarding its proxy recommendations and voting activity. The action follows a period of non-compliance by Institutional Shareholder Services after the regulator began an examination of the firm in March. Institutional Shareholder Services argued that full compliance with the subpoena could violate its First Amendment rights and expose the firm and its clients to retaliation over corporate voting matters. The Securities and Exchange Commission stated that the investigation is currently in the fact-finding stage and has not yet concluded that the firm violated federal securities laws. This legal action occurs during a period of increased oversight by the administration. In December, President Trump signed an executive order directing the Securities and Exchange Commission to review rules and guidance for proxy advisers, specifically naming Institutional Shareholder Services and Glass Lewis. The administration seeks to determine if proxy-voting advice is influenced by policy objectives at the expense of clients.

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