The Securities and Exchange Commission has asked a federal judge to force Institutional Shareholder Services to hand over four years of client voting records, the raw material of the proxy advisory business. ISS, which has been registered with the SEC as an investment adviser since 1997, has spent more than four months resisting the request, and its refusal has opened a fight over a question the industry thought the courts had settled: when the regulator examines an adviser, how deep into its clients' votes can it reach?
The dispute began quietly in March 2026, when the SEC's Division of Examinations opened a routine examination of ISS at its Rockville, Maryland headquarters. Examiners asked for records that would show how the firm's proxy recommendations translated into actual shareholder votes. ISS produced three sample reports from its ProxyExchange system in April. The SEC issued a formal order in July, then served an administrative subpoena on July 21. On September 4, the agency filed an application in the U.S. District Court for the Eastern District of Pennsylvania to compel compliance, as set out in SEC Litigation Release No. 26632.
Three requests, one fight
The subpoena contains three requests. The first two, for client-identifying documents and vote-authorization agreements, ISS has agreed to produce. The third, an electronic export of ProxyExchange recommendation and voting data, is where the fight sits.
The SEC's litigation release is careful about what the examination is not. The agency "has not concluded that any individual or entity violated the federal securities laws." This is an examination, not an enforcement action, and the subpoena grows out of the routine oversight authority the Advisers Act gives the commission over registered firms.
ISS sees something different. In an August letter, counsel Douglas A. Fellman argued the demand is "an unlawful effort to subject ISS to retaliatory actions for having engaged in protected speech." The firm says institutional clients submit voting instructions "with the expectation that it will remain confidential," and that disclosure could expose both ISS and its clients to retaliation over votes tied to controversial positions. It has also invoked the SEC's own confidential-treatment procedures as the appropriate channel.
The SEC's answer is blunt. No court has recognized a First Amendment retaliation defense to the examination of a registrant, the agency argues, and confidentiality is no shield "against the client's own regulator." The commission added a sharper point: ISS has sued state regulators over proxy-adviser restrictions, and it "cannot use the existence of SEC oversight and examination as a sword in state cases" while treating it as a shield in its own examination.
The legal standard favors the agency, mostly
Subpoena enforcement in the Third Circuit follows the framework the court laid out decades ago: the SEC wins if the request is within its authority, reasonably relevant to the inquiry, and not unreasonably broad or burdensome. The objector's burden is, in the court's own phrase, almost insurmountable. That is why enforcement applications like this one rarely fail.
But the context of this fight is political in a way proxy regulation has not been for years. In December 2025, the White House issued Executive Order 14366, "Protecting American Investors From Foreign-Owned and Politically-Motivated Proxy Advisors," which names ISS and Glass Lewis and directs the SEC to review its proxy-adviser rules and enforcement posture. The order asserts the two firms "control more than 90 percent of the proxy advisor market," a figure that comes from the order itself rather than audited market data. ISS is majority-owned by Deutsche Börse, the German exchange group, which is precisely the ownership structure the order targets.
That sequence, executive order first and examination demand second, is what turns an administrative records dispute into a speech fight. ISS reads the subpoena as the enforcement arm of a policy aimed at firms whose voting advice often runs against the administration's preferences on ESG and corporate governance. The SEC reads it as a registrant refusing, for the first time in the firm's history, to give examiners the core business records the Advisers Act entitles them to review.
The court already drew this map
The legal terrain was set by the D.C. Circuit's July 2025 ruling in ISS v. SEC, analyzed by the Harvard Law School Forum. That decision struck down the SEC's 2020 rulemaking on proxy advisers, holding that proxy advice "does not include entities that provide proxy voting recommendations requested by others." Proxy advice, the court said, is not a solicitation under Section 14(a) of the Exchange Act.
The same opinion, though, preserved a second road. The Advisers Act regulates investment advisers regardless of whether their advice counts as a solicitation, and the SEC's examination authority over registered advisers is separate from its proxy-rule authority. The current subpoena is that second road, and the examination power is the strongest tool the commission holds precisely because it does not require any finding of wrongdoing.
What changes if the court orders production is less about this subpoena and more about the precedent it sets for every proxy adviser's client data. Institutional votes on pay packages, board elections, and shareholder proposals would sit in the regulator's hands, subject to the SEC's own confidentiality protections but no longer protected only by the adviser's promise. ISS has built its business on the premise that clients can vote through it without those votes becoming a regulatory file. The premise is about to be tested.
What comes next
The application will move quickly by litigation standards. If the court compels, ISS can comply, appeal, or negotiate a production scope that satisfies the examination while preserving some client protection. If it wins, the SEC's examination authority over proxy advisers loses a significant reach for the first time.
Either way, the underlying exam continues. The commission has said explicitly that it has reached no conclusions, and the records request itself is the ordinary machinery of oversight. What is not ordinary is the moment: an examination that began under a presidential directive aimed at this specific industry, now contested in court over the same records that make proxy advice valuable in the first place. The votes ISS advised are, at the end, the product it sells. Whether its regulator gets to see them is no longer an administrative question. It is a judicial one.
Primary sources
- SEC Litigation Release No. 26632 for the filing, the case number, and the commission's statement that no violation has been concluded.
- The Industry Spread for the examination timeline, the three requests, and ISS's objections.
- Bloomberg reporting, syndicated by Yahoo Finance, for ISS's client-confidentiality position.
- Federal Register text of Executive Order 14366 for the administration's proxy-adviser policy.
- Harvard Law School Forum on Corporate Governance for the D.C. Circuit's 2025 ruling in ISS v. SEC.