Texas Attorney General Ken Paxton announced an investigation into proxy advisory firms Glass Lewis & Co. and Institutional Shareholder Services, Inc.
Paxton alleges the companies misled investors by pushing “radical political agendas” over financial principles.
The probe targets firms controlling over 95% of the international proxy advisory market. These companies influence tens of billions in corporate governance decisions nationwide.
Glass Lewis and ISS provide voting recommendations to shareholders and corporate boards on investment decisions. Paxton claims they routinely issue guidance favoring diversity, equity, and inclusion initiatives, gender-based hiring quotas, and climate activism policies.
The attorney general argues these recommendations lack economic analysis. He characterizes their justifications as “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.”
Paxton issued Civil Investigative Demands to both companies. The demands seek to determine whether they violated Texas consumer protection laws, including those prohibiting nondisclosures of material facts.
The Dallas Express previously reported that Paxton defended a new state law, S.B. 2337, that requires proxy advisors to disclose when non-financial considerations influence their recommendations. The legislation took effect on September 1 and faces legal challenges from Glass Lewis and ISS.
