Staff Reports
Missouri Attorney General Catherine Hanaway just asked a state court to force Institutional Shareholder Services (ISS) to cough up documents and answer questions about how it advises big investors. The petition to enforce a Civil Investigative Demand (CID) — filed in Cole County on July 8, 2025 — is short on theatrics and long on a basic question: is this proxy adviser selling objective voting guidance, or pushing an ideological agenda masked as investment advice?
Missouri AG moves to force ISS to hand over documents
The petition seeks a court order compelling ISS to comply with CID No. 25‑42 and produce documents within 20 days. Missouri’s case alleges ISS markets its recommendations as “objective and impartial” while using voting rules and policies that favor ESG and DEI outcomes. The Attorney General’s office says that mismatch — what Missouri calls a misrepresentation under the Missouri Merchandising Practices Act — deserves a full look. In plain language: the state wants to know whether pension dollars and retirement accounts are being guided by neutral financial analysis or by political preferences dressed up in corporate-speak.
Why the CID matters: proxy advisers wield real power over shareholder votes
ISS doesn’t run companies, but its voting recommendations are treated like gold by big institutional investors. Pension funds, mutual funds, and university endowments often rely on ISS when they vote on boards and major company policies. If a small set of outsiders quietly nudges votes toward net‑zero mandates or diversity tests, that can change corporate behavior — and the value of investments — without voters or shareholders getting a say. Missourians who depend on those pensions deserve to know if decisions are driven by returns or by trendy activist priorities.
ISS response and likely legal road ahead
ISS has denied the allegations and says it will defend its independence. Expect a predictable legal dance: motions to quash or remove to federal court, preemption arguments about federal securities law, and First Amendment or administrative-law claims. At the same time, federal regulators have shown interest in proxy advisors, so state and federal oversight could collide. Bottom line: this won’t be settled by press releases. The courtroom fight will decide whether states can peel back the curtain on how proxy advice is made.
What to watch next and why conservatives should care
Immediate developments to watch
Watch whether the Cole County judge enforces the CID, and whether Missouri converts the investigation into broader enforcement under the MMPA. Also watch for coordination among other state attorneys general and any parallel SEC or DOJ moves. The stakes are simple: more transparency and clearer rules about proxy advice would force accountability. If courts let opaque processes stand, the influence of proxy firms will keep growing — and that’s influence exercised outside the market’s usual checks and balances. Conservatives who care about protecting pensions, shareholder rights, and the basic idea that investment advice should focus on profit — not politics — should be paying attention. This fight is about who gets to decide what counts as “investment advice” — the people writing the checks or the activists behind the recommendations — and I’m betting most Missourians prefer the former.
