SEC sues ISS to enforce subpoena in the United States
In the United States, the Securities and Exchange Commission (SEC) has filed a lawsuit against Institutional Shareholder Services (ISS), seeking enforcement of an administrative subpoena concerning data on shareholder recommendations and voting. The lawsuit was filed on Friday in the U.S. District Court for the Eastern District of Pennsylvania, CNBC Top News reports.
Demand to provide documents
According to the SEC, its inspections division began examining ISS in March and requested information about the company’s recommendations and voting. After ISS did not provide all requested materials, the SEC’s enforcement division opened an investigation and issued a subpoena on July 21.
The regulator said ISS has continued to withhold some documents despite deadline extensions and repeated attempts to resolve the dispute. The SEC emphasized that the investigation is at the fact-finding stage and that the agency has not yet concluded that the company violated U.S. federal securities laws.
More current news is available on the UA.News Telegram channel Telegram.
ISS position and oversight of proxy advisers
In correspondence with the SEC, ISS said the subpoena raises issues related to the First Amendment to the U.S. Constitution and could expose it and its clients to retaliation because of their voting activities. The company did not immediately comment to CNBC.
The lawsuit was filed amid increased attention by the administration of U.S. President Donald Trump to proxy advisers — companies that prepare research and stock-voting recommendations for institutional investors. Such recommendations cover elections to boards of directors, executive compensation, and shareholder proposals.
In December, Trump signed an executive order directing the SEC to review rules and guidance concerning proxy advisers, enforce anti-fraud provisions of securities laws, and consider additional disclosure and regulatory requirements. The order specifically mentions ISS and its competitor Glass Lewis. The White House said the companies together control more than 90% of the proxy advisory market. ISS is registered with the SEC as an investment adviser, and the regulator is asking the court to compel the company to comply with the outstanding portion of the subpoena.
