ANALYSIS: Proxy Advisor’s Suit Fires a Shot Over the SEC’s Bow

Institutional Shareholder Services, Inc. (ISS) fired a broadside at the SEC with a federal lawsuit filed on October 31, 2019, in Washington, D.C. The action claims that the Commission acted unlawfully in August 2019 when it issued an interpretative release on proxy advisors. In that release, by a 3-2 vote, the SEC expressed its opinion that proxy advisory services are solicitations under the proxy rules and are subject to the Rule 14a-9 antifraud provisions. The timing of the lawsuit is particularly interesting, because the Commission is set to propose rulemaking on November 5, 2019, to formalize restrictions on proxy advisors ...