SEC prods ISS on client vote, recommendation disclosures

The SEC is pushing Institutional Shareholder Services (ISS) to disclose how its clients vote on proxy recommendations and how those votes align with ISS's own guidance – a move ISS says tramples free speech protections. The pressure reflects mounting regulatory scrutiny of proxy advisory firms, which wield enormous influence over shareholder voting yet operate with minimal transparency into their methodologies, conflicts of interest, and actual client uptake of their recommendations. ISS claims the request raises First Amendment concerns, but the SEC's logic is straightforward: if ISS recommendations shape voting outcomes at thousands of public companies, investors and regulators need visibility into whether clients actually follow that guidance and how voting patterns deviate. The tension sits at the heart of a deeper governance question – who controls the proxy system, and should private advisory firms operate as black boxes? ISS and its competitor Glass Lewis have long resisted detailed disclosure, arguing it protects client confidentiality and proprietary research. Regulators counter that opacity enables conflicts of interest and lets proxy advisors sidestep accountability for recommendations that affect real capital allocation. Neither side is wrong entirely. But if ISS's influence is as substantial as critics claim, visibility into client behaviour seems less about intrusion and more about basic market integrity. The real question: can ISS prove its recommendations actually drive votes, or has that influence been overstated?