The Justice Department’s Antitrust Division has withdrawn a nearly four-decade-old letter that gave Institutional Shareholder Services antitrust comfort for its proxy advisory business, stripping away a legal cushion the firm has operated under since the Reagan administration.

The division announced Wednesday that it is withdrawing a 1987 business review letter issued to Institutional Shareholder Services. The Antitrust Division framed the action around its commitment to promoting competition, reducing barriers to entry and ensuring compliance with the antitrust laws.

Under the business review procedure, a company describes proposed conduct to the Antitrust Division and receives a letter stating whether the division would challenge that conduct as an antitrust violation. Withdrawing one does not itself constitute an enforcement action. What it does is remove the assurance — and signal that the conduct described in the original letter may now be viewed differently.

Two Firms, One Market

Institutional Shareholder Services and Glass Lewis together control more than 90% of the U.S. proxy advisory market.

Their influence is difficult to overstate. These firms tell institutional investors how to vote on executive compensation packages, board slates, merger approvals and shareholder proposals across thousands of public companies. Their voting guidelines have shaped corporate governance to the point that companies routinely tailor governance decisions in anticipation of how the two firms will view them.

Neither firm owns a meaningful stake in the companies whose elections they shape. That gap between influence and ownership is the crux of the objection now coming from multiple directions in Washington.

The Campaign Around It

Wednesday’s withdrawal is one move in a broader effort.

In December 2025, President Trump signed an executive order titled “Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors,” naming both firms explicitly and expressing concern that they use influence over shareholder proposals, board composition and executive pay to advance politically motivated agendas. The order directed the Securities and Exchange Commission, the Federal Trade Commission and the Department of Labor to increase oversight of both companies.

Among its instructions, the order told the FTC, in consultation with the attorney general, to determine whether proxy advisory firms are engaged in unfair methods of competition or unfair or deceptive practices under federal antitrust law. The SEC was directed to enforce antifraud provisions against voting recommendations, assess whether the firms should register as investment advisers, consider requiring expanded disclosure of methodology and conflicts, and analyze whether proxy advisers help investment managers coordinate voting decisions in a way that constitutes acting as a group.

The FTC has separately been examining whether the firms’ dominant market positions constitute anticompetitive behavior, with particular attention to conflicts where a firm advises shareholders on how to vote while simultaneously selling consulting services to the same company.

Attorneys general in Texas, Florida and Missouri have opened investigations and filed suits alleging the firms mislead investors by advancing agendas rather than basing recommendations on financial performance.

The firms have not lost every round. Federal judges issued preliminary injunctions this summer blocking Kansas and Indiana laws targeting proxy advisers, after both companies challenged the statutes as unconstitutional. And in July 2025, the D.C. Circuit affirmed a lower court decision vacating the SEC’s 2020 proxy advisory rules.

The Business Is Already Changing

The commercial pressure may matter more than the legal pressure.

Both firms have been repositioning their offerings toward research and customizable analysis rather than a single standardized voting recommendation. Glass Lewis announced last fall that it would end its benchmark proxy voting policy, and in November 2025 said it would register with the SEC as an investment adviser, following the path ISS had already taken.

The most consequential development came from a client. In early January 2026, J.P. Morgan Asset Management dropped both firms entirely, moving to an internal platform supported by artificial intelligence.

That is the scenario the two companies should fear more than a regulatory finding. Their product is a labor-saving device — a way for asset managers holding thousands of positions to discharge a fiduciary voting obligation without building the research capacity in-house. If AI tools let large managers do that internally at lower cost, the market shrinks regardless of what any agency decides.

Governance lawyers have flagged that the shift away from one-size-fits-all benchmark policies toward custom voting policies for individual institutional clients could be highly consequential for shareholder engagement and the outcomes of future proxy contests.

For corporate boards, the direction is clear enough. The single external recommendation that once determined a vote is fragmenting into many, and the firms that supplied it are losing both their regulatory shelter and their captive customer base at the same time.

JBizNews Desk | New York

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