Full Breakdown
Trump Signs Executive Order to Increase Oversight of Proxy Advisory Firms
12/12/2025, 6:02:38 AM
Overview of the Executive Order
On December 11, 2025, U.S. President Donald Trump signed an executive order aimed at enhancing oversight of the proxy advisory industry. The order specifically targets major firms such as Institutional Shareholder Services (ISS) and Glass Lewis, which provide voting recommendations to institutional investors. The White House stated that these firms often "advance and prioritize radical politically-motivated agendas" over investor interests.
The executive order directs the U.S. Securities and Exchange Commission (SEC), along with other agencies like the Federal Trade Commission (FTC) and the Labor Department, to review existing regulations governing proxy advisors. This includes evaluating whether these firms have violated antitrust laws or other regulations concerning their handling of environmental and social governance (ESG) issues.
Key Directives of the Order
Trump's order mandates several actions from the SEC, including:
- Reviewing and potentially revising rules related to proxy advisors that involve diversity, equity, and inclusion, as well as environmental, social, and governance policies.
- Enforcing anti-fraud provisions against proxy advisors.
- Assessing whether proxy advisors should register as investment advisers.
- Enhancing disclosure requirements regarding conflicts of interest.
The order emphasizes the need for increased accountability and transparency within the proxy advisory industry to restore public confidence.
Background and Context
The executive order comes amid a broader conservative backlash against environmental and social investing. In recent months, both ISS and Glass Lewis have reduced their support for climate-related proposals and have ceased considering boardroom diversity in their recommendations. Despite these changes, the firms have successfully challenged previous Republican attempts to impose stricter regulations on their operations, including a federal judge's ruling that blocked Texas from enforcing a law restricting proxy advisors' advice on diversity and environmental matters.
Criticism and Opposition
Critics of Trump's order argue that it undermines the ability of proxy advisors to provide independent and informed recommendations to shareholders. Supporters of ISS and Glass Lewis contend that these firms play a crucial role in simplifying complex voting decisions for institutional investors. They assert that the order could hinder shareholder democracy and limit the ability of investors to advocate for corporate accountability on social and environmental issues.
Official Statements & Responses
In response to the executive order, an ISS spokesman stated that the firm would review the order to determine its next steps, emphasizing its commitment to operating ethically and in the best interests of clients. Glass Lewis did not provide immediate comments regarding the order.
Conflicting Reports & Gaps
While Trump's order aims to increase oversight, it has faced legal challenges and mixed reactions from industry stakeholders. For instance, a federal appeals court recently sided with ISS, affirming that the firm does not "solicit" proxy votes, which has implications for the enforcement of new regulations. Additionally, both ISS and Glass Lewis are currently facing lawsuits from state attorneys general in Florida and Texas, alleging violations of consumer protection and antitrust laws.
What's Next
The SEC is now tasked with conducting a thorough review of the proxy advisory industry, which may lead to new regulations or adjustments to existing rules. The outcome of this review will significantly impact how proxy advisors operate and their influence on shareholder voting in the future.
