SEC sues ISS over withholding proxy voting data
The U.S. Securities and Exchange Commission filed a lawsuit against Institutional Shareholder Services to compel the firm to provide records of its proxy recommendations following a failed administrative subpoena.
Institutional Shareholder Services (ISS) faces a lawsuit from the U.S. Securities and Exchange Commission (SEC) seeking information on its proxy voting activities. The SEC filed this action in the U.S. District Court for the Eastern District of Pennsylvania on Friday, accusing ISS of refusing to fully comply with an administrative subpoena issued in July 21. The investigation began in March when the agency requested data regarding ISS's recommendations and votes on shareholder proposals. ISS initially refused routine requests from enforcement staff but eventually received a specific deadline to submit records. Despite extended deadlines and repeated attempts to resolve the dispute, ISS continued to withhold some records. In correspondence with the regulator, ISS argued that the subpoena raised First Amendment concerns and potentially exposed its clients to retaliation for their voting activity. The SEC stated that the investigation is currently in the fact-finding stage and has not yet concluded whether ISS violated federal securities laws. ISS did not immediately respond to requests for comment.
