DOJ Withdraws 1987 ISS Business Review Letter, Thereby Signaling Continued Proxy-Advisor Scrutiny

Amidst growing federal and state scrutiny of proxy advisory firms, the U.S. Department of Justice’s Antitrust Division (the “Division”) recently entered the fray. On August 5, 2026, the Division withdrew its 1987 business review letter (the “Letter”) to proxy advisory firm Institutional Shareholder Services Inc. (ISS), stating that the Letter no longer reflects ISS’s current business practices and citing concerns about concentration among proxy advisors.

The Division’s decision to withdraw the Letter is not an enforcement action or a finding that ISS violated the antitrust laws. In fact, the Division emphasized that proxy advising is not inherently problematic and that voting based on a proxy advisor’s recommendation does not by itself raise competition concerns. However, the Division’s decision signals that proxy advisors like ISS, and perhaps the broader asset management industry, may face increased scrutiny, especially during next year’s proxy season.

Background

Under the Division’s business review letter program, companies may request guidance on whether proposed conduct is likely to draw an antitrust challenge. After the program was inactive throughout the Biden administration, the Division announced its revival in July 2026. Under 28 C.F.R. § 50.6, a business review letter is fact-specific, applies only to the requesting parties and conduct described in the request, and states only the Division’s enforcement intentions as of the letter’s date. The Division remains free to take later action if it concludes that the public interest requires it.

In 1987, the Division issued a business review letter stating that it had “no current intention” to challenge ISS’s establishment and operation, based on its understanding that ISS would advise only on voting rights and corporate governance and would not advise or engage in discussions concerning “corporate operations or business activities.” However, when withdrawing the Letter nearly four decades later, the Division observed that ISS now offers corporate consulting services that contradict the factual premise of the Letter.

The Division also referenced the concentration among proxy advisors as part of its reasoning for withdrawing the Letter. The Division noted that ISS and Glass, Lewis & Co. LLC (“Glass Lewis”) together “control more than 90% of the proxy advisory industry,” which raises “significant competition concerns” because of their alleged influence over corporate governance matters for America’s largest companies.

A Broader Trend

Although it did not identify an antitrust violation or announce an investigation, the Division’s decision to withdraw the Letter comes amid a flurry of antitrust inquiries by myriad enforcers targeting proxy advisors’ market position, potential conflicts, disclosures, methodologies, and sustainability-related voting policies.

• Congressional Committees: In August 2023, the House Judiciary Committee sent letters to ISS and Glass Lewis claiming that the firms “colluded with institutional investors to force American corporations to ‘decarbonize’ their assets and reduce their emissions to net zero.” After issuing written reports alleging ISS and Glass Lewis were part of an alleged “climate cartel,” the House Judiciary Committee held a hearing in June 2025 examining alleged “anticompetitive conduct” by proxy advisory firms.
• State Attorneys General: In November 2023, a coalition of 23 state attorneys general (“State AGs”) followed suit with a letter of their own. One year later, in November 2024, Texas and several other states filed an antitrust and consumer protection lawsuit against three large asset managers in federal court. Although proxy advisors themselves were not a target of the lawsuit, the states alleged that the asset managers used proxy voting to pressure companies to reduce coal output. Notably, during motion-to-dismiss briefing in May 2025, the Division and FTC filed a statement of interest in the federal case arguing that the safe harbor for passive investment and beneficial corporate governance does not protect the type of proxy voting alleged in the States’ complaint, a distinction the Division expressly referenced when announcing the ISS Letter withdrawal. Then, beginning in late 2025, the State AGs of Florida, Texas, Nebraska, Iowa, and West Virginia each filed their own antitrust or consumer protection lawsuits against ISS related to ISS’s alleged promotion of sustainability objectives over investor returns. The scope, legal theories, and procedural posture of those matters differ, and the allegations have not been adjudicated.
• Federal Agencies: In November 2025, the Federal Trade Commission (FTC) reportedly opened an investigation into whether ISS’s and Glass Lewis’s practices constitute unfair methods of competition. In December 2025, President Trump issued an Executive Order, directing the SEC, FTC, DOJ, and Department of Labor to examine proxy-advisory practices under securities, antitrust, consumer protection, and ERISA authorities, including issues involving conflicts, methodology, registration, coordination, and fiduciary duties.

Apart from these antitrust-focused investigations, several states have pursued broader legislative and enforcement initiatives against proxy advisory firms in recent years. Several state legislatures have introduced or passed legislation requiring proxy advisors to provide explicit financial justifications and public disclosures whenever their voting recommendations involve sustainability factors, resulting in some cases in federal courts enjoining enforcement of these laws against ISS and Glass Lewis.

Other than the statement of interest mentioned above, the Division has been largely silent on proxy-advisory services until now. Although it does not mean that the Division is investigating the firm or the industry, the Division’s decision to withdraw the Letter to ISS clears the path for such an action. The Division also would not be starting from scratch. The antitrust inquiries by other enforcers in recent years have led to the disclosure of a significant amount of information about the proxy advisors and the U.S. companies they advise. This information may be more than sufficient for the Division to open an investigation, which means that proxy advisors—and the companies and investors that rely upon them—should tread carefully.

Key Takeaways

• Comfort from a Letter May Be Fleeting: Companies and organizations relying upon an existing business review letter should be mindful that the Division can withdraw the letter with little to no warning and should conduct themselves accordingly. Companies and organizations in this position should confirm that current practices remain consistent with the practices described in the letter, because material changes may mean that a withdrawal is around the corner.
• Proxy-Advisor Scrutiny Continues and May Broaden: Proxy advisors, investors, asset managers, and public companies should continue to monitor antitrust, consumer-protection, securities, fiduciary, and state-law developments. Particular areas of focus include conflicts and information barriers, independent voting decisions, methodology disclosures, and coordination that could affect output or other competitive variables.
• The Division Is Looking at Sustainability-Related Practices: Proxy advisors may not be the last segment of the financial industry that the Division assesses for its sustainability-related practices. Companies, asset managers, and other market participants involved in sustainability-related activities should continue to monitor these developments closely.