EO-14366
Protecting American Investors From Foreign-Owned and Politically-Motivated Proxy Advisors
- Signed
- Dec 11, 2025
- Published
- Dec 16, 2025
Federal Register: 2025-23093
Source: Federal Register.
Increased Oversight of Proxy Advisory Firms and Their Recommendations
What it does
This order directs the SEC, FTC, and Department of Labor to review and potentially revise rules governing proxy advisory firms — companies that advise large institutional investors on how to vote shares in publicly traded corporations. It instructs the SEC to examine whether proxy advisors' recommendations on diversity, equity, and inclusion (DEI) and environmental, social, and governance (ESG) factors violate anti-fraud or fiduciary duty rules. It also directs the FTC to investigate whether the two dominant proxy advisory firms — Institutional Shareholder Services (ISS) and Glass Lewis — engage in anticompetitive or deceptive practices that harm American investors.
Who benefits
Retail investors in 401(k)s, IRAs, and pension plans who supporters say would receive advice focused solely on financial returns. Domestic companies that have faced shareholder proposals on DEI or ESG matters. Smaller or new proxy advisory firms that could gain market share if the dominant firms face new regulatory burdens. Shareholders who believe current proxy advice depresses the value of their investments. State attorneys general already investigating proxy advisors.
Who is affected
ISS and Glass Lewis, the two firms that control roughly 90% of the proxy advisory market, which would face new regulatory scrutiny and potential registration requirements. Institutional investors (mutual funds, pension funds, ETFs) that rely on proxy advisors to manage high volumes of shareholder votes. Corporate boards and executives whose compensation and composition decisions are influenced by proxy advisor recommendations. Shareholders and advocacy groups that use the proxy process to raise DEI and ESG proposals. Workers and retirees whose pension funds may face changes in how their shares are voted.
Supporters argue
Supporters argue that two foreign-owned firms exercising outsized influence over the governance of America's largest companies — with little regulatory oversight or transparency — poses a genuine risk to investors and market integrity. They contend that directing proxy advisors to focus exclusively on financial returns is consistent with the fiduciary duty owed to retirement savers, and that the SEC and Department of Labor have clear statutory authority under the Investment Advisers Act and ERISA to impose accountability and conflict-of-interest disclosure requirements on firms that wield this level of market power.
Opponents argue
Opponents argue that proxy advisors provide a valuable, market-driven service that helps institutional investors manage the practical burden of voting millions of shares, and that restricting ESG and DEI considerations would limit investors' ability to assess material long-term business risks. They contend that the order's characterization of ESG and DEI advice as "politically motivated" reflects a value judgment rather than a legal standard, and that using regulatory pressure to steer proxy recommendations toward particular outcomes could itself constitute government interference in private investment decisions and shareholder speech.
Constitutional basis
Executive orders rest on constitutional authority or statutory delegation. This summary describes the legal grounding cited or implied by the order.
The order does not invoke a specific Article II clause directly, but rests on the president's Take Care Clause authority (Article II, §3) to direct executive agencies in implementing existing statutes. The statutory foundations include the Securities Exchange Act of 1934 (15 U.S.C. §78a et seq.), the Investment Advisers Act of 1940 (15 U.S.C. §80b-1 et seq.), the Federal Trade Commission Act (15 U.S.C. §41 et seq.), and the Employee Retirement Income Security Act of 1974 (ERISA, 29 U.S.C. §1001 et seq.), all of which delegate rulemaking and enforcement authority to the relevant agencies.