Attorney General Ken Paxton announced an investigation into Glass Lewis & Co. (“Glass Lewis”) and Institutional Shareholder Services, Inc. (“ISS”) for potentially misleading institutional investors and public companies by issuing voting recommendations that advance radical political agendas rather than sound financial principles.
Glass Lewis and ISS collectively occupy more than 95% of the international market for proxy advisory services. The companies primarily provide services to shareholders and boards of large corporations to help them make investment decisions. The two giants routinely issue proxy voting recommendations in conflict with the best financial interests of their fiduciaries. For example, Glass Lewis and ISS instruct their proxies to generally vote for public companies making management decisions to implement DEI, gender-based hiring quotas, and aggressive climate activist policies. Neither Glass Lewis nor ISS seem to support their radical guidelines with any economic analysis, only a word salad of corporate lingo.
“Proxy firms like Glass Lewis and ISS too often sacrifice sound financial guidance to advance left-wing political goals, cheating not only investors but the American people as a whole,” said Attorney General Paxton. “Proxy advisors play a massive role in shaping corporate governance decisions in our country, affecting tens of billions of dollars. My office has zero tolerance for these woke corporations smuggling radical, liberal ideology into the companies they advise and into the entirety of America’s financial system.”
Attorney General Paxton has issued Civil Investigative Demands (“CIDs”) to the proxy advisor duopoly to determine if they violated Texas consumer protection laws, including those prohibiting nondisclosures of material facts.