President Donald Trump signed an executive order Thursday aimed at curbing the influence of foreign-owned proxy advisory firms that the White House says prioritize political agendas over maximizing returns for American investors and retirees.
According to a White House fact sheet released December 11, the order targets proxy advisors that emphasize “diversity, equity, and inclusion” (DEI) and “environmental, social, and governance” (ESG) priorities in shareholder voting recommendations tied to U.S. retirement accounts.
Regulatory Actions Directed
The executive order directs the Chairman of the Securities and Exchange Commission (SEC) to review and, where appropriate, rescind or revise existing rules governing proxy advisors that implicate DEI and ESG priorities, as well as rules related to shareholder proxy proposals that conflict with the policies outlined in the order.
The SEC is also instructed to:
- Enforce anti-fraud provisions in securities laws against proxy advisors related to voting recommendations
- Consider requiring proxy advisors to register as investment advisers
- Evaluate whether proxy advisors should provide greater transparency regarding conflicts of interest
- Examine whether proxy advisors serve as a mechanism for coordinated voting among investment advisers
- Assess whether registered investment advisers breach fiduciary duties by relying on proxy advice tied to non-pecuniary factors, including DEI and ESG considerations
The order further directs the Chairman of the Federal Trade Commission, in consultation with the Attorney General, to determine whether proxy advisors engage in unfair methods of competition or deceptive practices, and to review ongoing state antitrust investigations for potential violations of federal antitrust law.
The Secretary of Labor is instructed to strengthen ERISA fiduciary rules and increase transparency around the use of proxy advisors, with the stated goal of ensuring retirement plan fiduciaries and proxy advisors act solely in the financial interests of workers and retirees.
Proxy Advisor Market Concentration
The White House said two foreign-owned firms — Institutional Shareholder Services and Glass Lewis — control more than 90% of the proxy advisory market, giving them significant influence over shareholder votes involving board composition, executive compensation, and corporate governance at major U.S. companies.
According to the fact sheet, the firms frequently recommend votes in favor of racial equity audits, aggressive greenhouse gas emissions reductions, and other proposals tied to DEI and ESG priorities. The administration said institutional investors often adopt those recommendations without independent analysis, amplifying the firms’ influence.
The White House argues that conflicts of interest, limited transparency, and standardized voting policies have eroded trust and negatively affected retirement savings for middle- and working-class Americans.
Texas Investigation and Broader Context
As The Dallas Express previously reported, Texas Attorney General Ken Paxton launched a state-level investigation earlier this year into Institutional Shareholder Services and Glass Lewis, alleging the firms misled investors by advancing political agendas over financial principles.
Paxton’s investigation includes civil investigative demands seeking information on whether the firms violated Texas consumer protection laws, including requirements related to disclosure of non-financial considerations. Texas lawmakers also enacted legislation requiring proxy advisors to disclose when non-pecuniary factors influence their recommendations, a law that has since faced legal challenges from the firms.
Campaign Promise and Economic Agenda
President Trump previously pledged on the campaign trail to keep political considerations out of retirement investing.
“I will demand that funds invest your money to help you, not them,” Trump said. “Not to help the radical left communists.”
The White House framed the executive order as part of a broader effort to expand retirement security and investment opportunities, citing tax cuts, deregulation, and a separate executive order allowing 401(k) investors access to alternative assets for diversification and potential higher returns.
