Key facts
- The Department of Justice intends to withdraw a 1987 letter that stated proxy advisor Institutional Shareholder Services' business model did not raise antitrust concerns.
- President Donald Trump has previously called for an antitrust probe into proxy advisors Institutional Shareholder Services and Glass, Lewis & Co.
- These firms help institutional investors decide how to vote at corporate elections.
- A Heritage Foundation report argued that the dominance of ISS and Glass Lewis warrants investigation by the DOJ or FTC.
- The House Judiciary Committee has also raised antitrust concerns regarding the proxy firms' market control.
The U.S. Department of Justice is planning to withdraw a decades-old guidance letter concerning proxy advisory firms, signaling increased antitrust scrutiny of the industry. The 1987 letter had previously stated that Institutional Shareholder Services' business model did not raise antitrust concerns. This move aligns with a broader campaign by the Trump administration and Republican lawmakers against firms that advise shareholders on corporate votes, particularly concerning environmental, social, and governance (ESG) issues.
President Donald Trump has previously called for an antitrust probe into Institutional Shareholder Services (ISS) and Glass, Lewis & Co, which together dominate the proxy advisory market. These firms provide recommendations to mutual funds and other institutional investors on how to vote their shares in corporate elections. A recent report from the Heritage Foundation argued that the duopoly formed by ISS and Glass Lewis warrants investigation by the Department of Justice or the Federal Trade Commission. The House Judiciary Committee has also issued its own report highlighting antitrust concerns over the firms' market control.
Critics, including Republican lawmakers and some companies, have accused ISS and Glass Lewis of improperly influencing votes on ESG matters. However, the firms have pushed back against these claims, stating that their clients are not obligated to follow their advice and that they are not engaging in anticompetitive practices. The firms have also been fighting restrictions imposed by the Securities and Exchange Commission during Trump's first term.