Highlights

• Texas Attorney General Ken Paxton probes Glass Lewis and ISS for alleged politically driven proxy voting recommendations.
• The firms control over 95% of the global proxy advisory market, giving them wide influence on corporate governance.
• Paxton seeks to learn whether their actions violate Texas consumer protection laws by omitting material facts.

Texas Attorney General Ken Paxton has opened an investigation into the proxy advisory companies Glass Lewis and Institutional Shareholder Services (ISS).

These two firms provide guidance to major shareholders and company boards on how to vote during corporate meetings. Together, they control more than 95 percent of the global market for these services, which give them considerable influence over investment decisions.

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Paxton claims that Glass Lewis and ISS have issued voting advice based on political agendas rather than the financial interests of investors. He cites their recommendations that encourage diversity and inclusion policies, gender-based hiring quotas, and climate-related actions.

According to Paxton, the firms present these recommendations with corporate language but without clear economic analysis to show how such policies benefit investors.

To move the inquiry forward, Paxton’s office has sent Civil Investigative Demands to both companies. These requests aim to determine whether the firms have violated Texas consumer protection laws, which require full disclosure of important information.

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Paxton says that proxy advisors influence decisions involving billions of dollars, so their advice must remain focused on financial outcomes rather than political beliefs.

Ends/

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Source: Ken Paxton