Paxton Launches Investigation Into Proxy Advisory Giants

Attorney General Ken Paxton has announced a formal investigation into Glass Lewis and Institutional Shareholder Services, Inc. ("ISS") for allegedly misleading institutional investors and public companies through proxy voting recommendations that prioritize political agendas over financial responsibility.

Glass Lewis and ISS dominate more than 95% of the international market for proxy advisory services. Their recommendations influence shareholder decisions and corporate governance at some of the world's largest companies. Paxton's office argues that both firms promote policies that conflict with the best financial interests of shareholders.

According to Paxton, the two firms have repeatedly instructed proxies to support management decisions that implement diversity, equity, and inclusion (DEI) initiatives, gender-based hiring quotas, and aggressive climate-related policies.  These decisions are often made without providing economic analysis to justify such recommendations.

"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," Paxton said. "Proxy advisiors play a massive role in shaping corporate governance decisions in our country, affecting tens of billions of dollars."

Paxton's office has issued Civil Investigative Demands to both firms. The demands will determine whether the proxy advisory companies violated Texas consumer protection laws, including those related to nondisclosures of material facts.

"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 said.

The investigation represents the latest move in Paxton's ongoing scrutiny of what he describes as the infiltration of "radical ideology" into financial systems.