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The US Department of Justice just pulled the rug out from under one of the most quietly powerful industries in American finance. On August 5, the DOJ withdrew a 1987 Business Review Letter that had effectively given proxy advisory firm Institutional Shareholder Services (ISS) a clean bill of health under antitrust law for nearly four decades.
What proxy advisers actually do, and why it matters
If you’ve never heard of ISS or Glass Lewis, you’re not alone. These firms advise institutional investors, think pension funds, mutual funds, and asset managers, on how to vote on shareholder proposals at public companies. Executive pay packages, board elections, mergers, and increasingly, ESG-related proposals all flow through their recommendation engines.
Together, these two firms control more than 90% of the proxy advisory market for US institutional investors. ISS has evolved significantly since 1985, when it was founded. The firm now provides advisory services on executive compensation and governance to the very corporations whose shareholders it also advises. That dual-client model is precisely what raised red flags. The DOJ concluded that ISS’s current business practices differ meaningfully from the scenarios it evaluated back in 1987.
A broader political push
This wasn’t a bolt from the blue. President Trump signed an executive order in December 2025 instructing multiple federal agencies to review antitrust investigations concerning proxy advisors. He has specifically called for an antitrust investigation into both ISS and Glass Lewis, framing the issue around competitive concerns and corporate governance influence.
Congressional hearings throughout 2025 amplified the scrutiny, with lawmakers questioning whether the firms’ outsized influence was healthy for markets. The Department of Labor added another layer in April 2026, issuing new guidance examining whether proxy advisory firms could be classified as ERISA fiduciaries. If proxy advisers were deemed fiduciaries under ERISA, the federal law governing retirement plans, they’d face significantly higher legal standards and liability when making recommendations to pension funds.
Conservative lawmakers have argued that ISS and Glass Lewis have used their market dominance to push ESG-related shareholder proposals, effectively acting as ideological gatekeepers in corporate America.
What this means for investors and markets
The withdrawal of the Business Review Letter doesn’t immediately change anything operationally for ISS. It’s not an enforcement action, and it’s not a lawsuit. But it removes the legal comfort blanket that ISS has operated under since the Reagan administration. Without that letter, ISS now operates in a regulatory gray zone where its dual-client business model could theoretically be challenged under antitrust statutes.
Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy.
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