Executive Order 14366, signed December 11, 2025, targets the proxy advisory industry—specifically Institutional Shareholder Services Inc. (ISS) and Glass, Lewis & Co., LLC—which the order characterizes as foreign-owned entities wielding disproportionate influence over American corporate governance. The two firms collectively control more than 90 percent of the proxy advisor market and shape voting decisions affecting millions of Americans' retirement savings, including 401(k)s and IRAs. The administration frames the order as a corrective to what it describes as proxy advisors using their market power to advance "radical politically-motivated agendas," specifically citing diversity, equity, and inclusion (DEI) and environmental, social, and governance (ESG) priorities, which the order argues improperly displace investor financial returns. Critically, the order's reach extends beyond proxy advisor oversight: by directing review of shareholder proposal rules—including Rule 14a-8—it signals potential constraints on shareholders' ability to bring ESG- and DEI-related proposals at all, materially raising the stakes for corporate governance, investor engagement, and board-facing activism. The order also raises concerns about conflicts of interest and the accuracy of proxy recommendations.
The order directs three federal agencies to undertake coordinated regulatory and investigative actions anchored by a government-wide push to establish pecuniary financial return as the dominant or exclusive fiduciary benchmark. This reframing has strategic implications well beyond the two named firms: it could alter how asset managers, pension fiduciaries, and proxy advisors justify voting and engagement decisions, reshaping compliance, stewardship, and litigation risk across retirement and asset-management businesses. The SEC Chairman is instructed to review and potentially revise or rescind rules and guidance related to proxy advisors and shareholder proposals, enforce anti-fraud provisions against material misstatements in proxy recommendations, and examine whether investment advisers relying on proxy recommendations for non-pecuniary factors breach their fiduciary duties. The FTC Chairman, in consultation with the Attorney General, is directed to review state antitrust investigations and investigate potential unfair, deceptive, or anticompetitive practices. The Secretary of Labor is tasked with revising ERISA-related fiduciary regulations and assessing whether proxy advisor practices serve the financial interests of pension plan participants.
Three specific legal reclassifications contemplated by the order warrant particular attention from senior decision-makers, as they would transform the order from a rhetorical critique into a structural reshaping of market participants with significant business-model consequences. First, the SEC is directed to assess whether proxy advisors should register as Registered Investment Advisers—a designation carrying expanded disclosure, conduct, and liability obligations. Second, the Secretary of Labor is directed to consider classifying proxy advisors as ERISA investment advice fiduciaries, substantially increasing their legal exposure with respect to pension plan clients. Third, the SEC is directed to analyze whether coordinated proxy advisor voting activity constitutes "group" formation under the Securities Exchange Act of 1934, a determination that could impose additional regulatory burdens on both proxy advisors and the investment advisers that rely on them. All agency actions must comply with the Administrative Procedure Act, meaning regulatory changes will require notice-and-comment rulemaking before taking effect, and no fixed implementation deadlines are established.