DOJ Antitrust Division Withdraws Decades-Old Letter Shielding Proxy Advisor ISS

On August 5, 2026, the Department of Justice formally revoked a 39-year-old document that had shielded the world's largest proxy advisory firm from antitrust scrutiny. The withdrawal of the 1987 Business Review Letter issued to Institutional Shareholder Services (ISS) marks a structural shift in how the federal government treats the mechanics of corporate governance.[1][2]

The DOJ Antitrust Division stated that the original letter no longer reflects ISS's current business practices or the competitive realities of the modern financial ecosystem. When the letter was issued, proxy advising was in its infancy, and the DOJ granted antitrust comfort based on the explicit understanding that ISS would strictly advise on voting rights without engaging in corporate consulting.[1][6]

Today, the landscape is fundamentally different. Enforcers argue that ISS has expanded its operations well beyond that initial limited scope, offering corporate consulting services that directly conflict with the foundational premise of the 1987 safe harbor.[1][8]

Beyond the shift in business models, the DOJ pointed to extreme market concentration as a primary driver for the withdrawal. ISS and its main competitor, Glass, Lewis & Co., now control more than 90 percent of the proxy advisory market in the United States.[4][5]

Because their institutional investor clients hold significant ownership stakes in virtually every major publicly traded company, this duopoly wields tremendous influence over corporate governance matters. The DOJ noted that this market dominance allows the two firms to effectively shape the policies of America's largest corporations.[1][9]

The withdrawal does not constitute a formal enforcement action or a finding that ISS has violated antitrust laws. However, legal analysts note that a Business Review Letter only states the DOJ's enforcement intentions at the time of issuance, leaving the agency completely free to bring future actions if it deems them necessary for the public interest.[5][6]

The timing of the revocation aligns with a broader political and regulatory campaign against proxy advisors. In December 2025, the Trump administration issued an Executive Order directing antitrust agencies to investigate proxy advisors for unfair methods of competition, specifically targeting their support for environmental, social, and governance (ESG) initiatives and diversity programs.[2][4]

Congressional Republicans have also pressured the DOJ and the Federal Trade Commission to rein in the influence of these firms, applauding recent investigations and encouraging further legal action to curb what they view as ideological overreach.[3]

At the state level, the pressure has been equally intense. At least 13 states have recently proposed or enacted legislation imposing strict disclosure requirements and other operational obligations on proxy advisory firms, while the Florida Attorney General launched a separate antitrust lawsuit in late 2025.[9]

For institutional investors—such as pension funds, mutual funds, and asset managers—proxy advisors solve a massive collective action problem. Fiduciaries responsible for managing vast pools of capital often lack the internal resources to analyze and vote on thousands of director elections, executive compensation packages, and shareholder proposals every proxy season.[2][7]

Stripping ISS of its antitrust comfort introduces new legal risks for the asset management industry. If proxy advisors are forced to alter their uniform voting recommendations or curtail their research output to avoid hub-and-spoke conspiracy allegations, institutional investors may face significantly higher compliance costs.[2][8]

Ultimately, the DOJ's maneuver signals that the federal government is no longer willing to treat proxy advisors as neutral administrative utilities. As the next proxy season approaches, the industry faces the dual threat of heightened federal antitrust scrutiny and an increasingly hostile state-level legislative environment.[5][9]