On December 11, 2025, President Trump issued an Executive Order titled “Protecting American Investors From Foreign-Owned and Politically Motivated Proxy Advisors,” which is aimed at “increas[ing] oversight of and tak[ing] action to restore public confidence in the proxy advisor industry, including by promoting accountability, transparency, and competition.” Targeting the proxy advisors as “foreign-owned,” the Executive Order states:
[T]hese proxy advisors wield enormous influence over corporate governance matters, including shareholder proposals, board composition, and executive compensation, as well as capital markets and the value of Americans’ investments more generally, including 401(k)s, IRAs, and other retirement investment vehicles. These proxy advisors regularly use their substantial power to advance and prioritize radical politically-motivated agendas — like “diversity, equity, and inclusion” and “environmental, social, and governance” — even though investor returns should be the only priority. For example, these proxy advisors have supported shareholder proposals requiring American companies to conduct racial equity audits and significantly reduce greenhouse gas emissions, and one continues to provide guidance based on the racial or ethnic diversity of corporate boards.
The Executive Order mandates that:
(i) the Securities and Exchange Commission (SEC) Chairman (a) review all rules, regulations, guidance, bulletins, and memoranda relating to proxy advisors, and consider revising or rescinding them, especially to the extent that they implicate “diversity, equity, and inclusion” (DEI) and “environmental, social, and governance” (ESG) policies; (b) enforce the Federal securities laws’ anti‑fraud provisions with respect to material misstatements or omissions contained in proxy advisors’ voting recommendations (and, presumably, the accompanying reports); (c) assess whether to require proxy advisors to register as Registered Investment Advisers; and (d) consider requiring proxy advisors to provide increased transparency on their recommendations, methodology, and conflicts of interest, especially regarding DEI and ESG;
(ii) the SEC Chairman consider revising or rescinding all rules, regulations, guidance, bulletins, and memoranda relating to shareholder proposals, including Exchange Act Rule 14a-8, that are inconsistent with the purpose of the Executive Order;
(iii) the SEC Chairman analyze whether a proxy advisor serves as a vehicle for investment advisers to coordinate and augment their voting decisions with respect to a company’s securities and, through such coordination and augmentation, form a “group” for purposes of the Exchange Act;
(iv) the Federal Trade Commission (FTC) Chairman investigate whether proxy advisors engage in unfair methods of competition or unfair or deceptive acts or practices that harm United States consumers or engage in conduct that violates the federal antitrust laws; and
(v) the Secretary of Labor (a) revise regulations and guidance regarding the fiduciary status of individuals who manage or, like proxy advisors, advise those who manage shares held by plans covered under the Employee Retirement Income Security Act of 1974 (ERISA), including proxy votes and corporate engagement, consistent with the Executive Order; and (b) strengthen the fiduciary standards for ERISA plans, including assessing whether proxy advisors act solely in the financial interests of ERISA plan participants. READ MORE »
