The U.S. Securities and Exchange Commission (SEC) has petitioned a federal court to issue an order compelling Institutional Shareholder Services (ISS) to submit detailed client-level voting data required for an ongoing investigation. This probe targets the proxy advisory firm's operational practices.

According to regulatory filings, ISS has declined to fully comply with an administrative subpoena. The investigation, launched in March, aims to assess whether the company adheres to federal securities laws, including its fiduciary duty to prioritize client interests when offering recommendations.

The SEC stated in documents filed on Friday: "The Commission is fully authorized to examine whether ISS's proxy voting advice to clients is influenced by specific political or policy agendas that could undermine investor welfare." The agency seeks four years of records from the advisory firm, encompassing client identification documents and voting data.

This regulatory action stems from an executive order signed by President Donald Trump last December. The directive mandates the SEC chair to restrict proxy advisory entities such as ISS and Glass Lewis from issuing guidance on diversity, equity, and inclusion (DEI) policies and environmental, social, and governance (ESG) considerations.

The SEC's move underscores heightened scrutiny of proxy advisors, reflecting a broader regulatory push to ensure transparency and impartiality in corporate governance advisory services.