Protecting American Investors From Foreign-Owned and Politically-Motivated Proxy Advisors

[Federal Register Volume 90, Number 239 (Tuesday, December 16, 2025)]

[Presidential Documents]

[Pages 58503-58505]

From the Federal Register Online via the Government Publishing Office [www.gpo.gov]

[FR Doc No: 2025-23093]

Presidential Documents

Federal Register / Vol. 90, No. 239 / Tuesday, December 16, 2025 /

Presidential Documents

[[Page 58503]]

Executive Order 14366 of December 11, 2025

Protecting American Investors From Foreign-Owned

and Politically-Motivated Proxy Advisors

By the authority vested in me as President by the

Constitution and the laws of the United States of

America, it is hereby ordered:

Section 1. Purpose. Unbeknownst to many Americans, two

foreign-owned proxy advisors, Institutional Shareholder

Services Inc. and Glass, Lewis & Co., LLC, play a

significant role in shaping the policies and priorities

of America's largest companies through the shareholder

voting process. These firms, which control more than 90

percent of the proxy advisor market, advise their

clients about how to vote the enormous numbers of

shares their clients hold and manage on behalf of

millions of Americans in mutual funds and exchange

traded funds. Their clients' holdings often constitute

a significant ownership stake in the United States'

largest publicly traded companies, and their clients

often follow the proxy advisors' advice.

shares their clients hold and manage on behalf of

millions of Americans in mutual funds and exchange

traded funds. Their clients' holdings often constitute

a significant ownership stake in the United States'

largest publicly traded companies, and their clients

often follow the proxy advisors' advice.

As a result, these proxy advisors wield enormous

influence over corporate governance matters, including

shareholder proposals, board composition, and executive

compensation, as well as capital markets and the value

of Americans' investments more generally, including

401(k)s, IRAs, and other retirement investment

vehicles. These proxy advisors regularly use their

substantial power to advance and prioritize radical

politically-motivated agendas--like ``diversity,

equity, and inclusion'' and ``environmental, social,

and governance''--even though investor returns should

be the only priority. For example, these proxy advisors

have supported shareholder proposals requiring American

companies to conduct racial equity audits and

significantly reduce greenhouse gas emissions, and one

continues to provide guidance based on the racial or

ethnic diversity of corporate boards. Their practices

also raise significant concerns about conflicts of

interest and the quality of their recommendations,

among other concerns. The United States must therefore

increase oversight of and take action to restore public

confidence in the proxy advisor industry, including by

promoting accountability, transparency, and

competition.

cerns about conflicts of

interest and the quality of their recommendations,

among other concerns. The United States must therefore

increase oversight of and take action to restore public

confidence in the proxy advisor industry, including by

promoting accountability, transparency, and

competition.

Sec. 2. Protecting Investors from Politicized Advice.

(a) The Chairman of the Securities and Exchange

Commission (SEC) shall review all rules, regulations,

guidance, bulletins, and memoranda relating to proxy

advisors. Consistent with the Administrative Procedure

Act (APA) (5 U.S.C. 551 et seq.), the SEC Chairman

shall consider revising or rescinding those rules,

regulations, guidance, bulletins, and memoranda that

are inconsistent with the purpose of this order,

especially to the extent that they implicate

``diversity, equity, and inclusion'' and

``environmental, social, and governance'' policies.

(b) Consistent with the APA, the SEC Chairman shall

consider revising or rescinding all rules, regulations,

guidance, bulletins, and memoranda relating to

shareholder proposals, including Rule 14a-8 (17 CFR

240.14a-8), that are inconsistent with the purpose of

this order.

(c) The SEC Chairman shall:

onsistent with the APA, the SEC Chairman shall

consider revising or rescinding all rules, regulations,

guidance, bulletins, and memoranda relating to

shareholder proposals, including Rule 14a-8 (17 CFR

240.14a-8), that are inconsistent with the purpose of

this order.

(c) The SEC Chairman shall:

(i) enforce the Federal securities laws' anti-fraud provisions with respect

to material misstatements or omissions contained in proxy advisors' proxy

voting recommendations;

(ii) assess whether to require proxy advisors whose activities fall within

the scope of the Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et

[[Page 58504]]

seq.) and the rules promulgated thereunder, to register as Registered

Investment Advisers;

(iii) consider requiring proxy advisors to provide increased transparency

on their recommendations, methodology, and conflicts of interest,

especially regarding ``diversity, equity, and inclusion'' and

``environmental, social, and governance'' factors;

(iv) analyze whether, and under what circumstances, a proxy advisor serves

as a vehicle for investment advisers to coordinate and augment their voting

decisions with respect to a company's securities and, through such

coordination and augmentation, form a group for purposes of sections

13(d)(3) and 13(g)(3) of the Securities Exchange Act of 1934 (15 U.S.C. 78a

et seq.); and

rnance'' factors;

(iv) analyze whether, and under what circumstances, a proxy advisor serves

as a vehicle for investment advisers to coordinate and augment their voting

decisions with respect to a company's securities and, through such

coordination and augmentation, form a group for purposes of sections

13(d)(3) and 13(g)(3) of the Securities Exchange Act of 1934 (15 U.S.C. 78a

et seq.); and

(v) direct SEC staff to examine whether the practice of Registered

Investment Advisers engaging proxy advisors to advise on (and following the

recommendations of such proxy advisors with respect to) non-pecuniary

factors in investing, including, as appropriate, ``diversity, equity, and

inclusion'' and ``environmental, social, and governance'' factors, is

inconsistent with their fiduciary duties.

Sec. 3. Unfair, Deceptive, or Anticompetitive

Practices. (a) The Chairman of the Federal Trade

Commission (FTC), in consultation with the Attorney

General, shall review ongoing State antitrust

investigations into proxy advisors and determine if

there is a probable link between conduct underlying

those investigations and violations of Federal

antitrust law.

(b) The FTC Chairman, under the authorities

provided in the Federal Trade Commission Act (15 U.S.C.

41 et seq.) and in consultation with the Attorney

General, as appropriate, shall investigate whether

proxy advisors engage in unfair methods of competition

or unfair or deceptive acts or practices that harm

United States consumers by:

orities

provided in the Federal Trade Commission Act (15 U.S.C.

41 et seq.) and in consultation with the Attorney

General, as appropriate, shall investigate whether

proxy advisors engage in unfair methods of competition

or unfair or deceptive acts or practices that harm

United States consumers by:

(i) conspiring or colluding, explicitly or implicitly, to diminish the

value of consumer investments (including pensions and retirement accounts);

(ii) failing to adequately disclose conflicts of interest;

(iii) providing misleading or inaccurate information;

(iv) undermining the ability of consumers to make informed choices; or

(v) otherwise engaging in conduct that violates the antitrust laws as

defined in 15 U.S.C. 12(a) or section 5 of the Federal Trade Commission Act

(15 U.S.C. 45).

Sec. 4. Protecting Pensions and Retirement Plans. (a)

The Secretary of Labor shall, consistent with the APA,

take steps to revise all regulations and guidance

regarding the fiduciary status of individuals who

manage, or, like proxy advisors, advise those who

manage, the rights appurtenant to shares held by plans

covered under the Employee Retirement Income Security

Act of 1974 (ERISA) (29 U.S.C. 1001 et seq.), including

proxy votes and corporate engagement, consistent with

the policy of this order

who

manage, or, like proxy advisors, advise those who

manage, the rights appurtenant to shares held by plans

covered under the Employee Retirement Income Security

Act of 1974 (ERISA) (29 U.S.C. 1001 et seq.), including

proxy votes and corporate engagement, consistent with

the policy of this order. The Secretary of Labor shall

consider whether these proposed revisions should

include amendments to specify that any individual who

has a relationship of trust and confidence with their

client, including any proxy advisor, and who provides

advice for a fee or other compensation, direct or

indirect, with respect to the exercise of the rights

appurtenant to shares held by ERISA plans, is an

investment advice fiduciary under ERISA.

(b) The Secretary of Labor shall take all

appropriate action to strengthen the fiduciary

standards of pension and retirement plans covered under

ERISA. Such action shall include assessing whether

proxy advisors act solely in the financial interests of

plan participants and the extent to which any of their

practices undermine the pecuniary value of the assets

of ERISA plans.

(c) The Secretary of Labor shall take all

appropriate action to enhance transparency concerning

the use of proxy advisors, particularly regarding

[[Page 58505]]

``diversity, equity, and inclusion'' and

``environmental, social, and governance'' investment

practices.

Sec. 5. General Provisions. (a) Nothing in this order

shall be construed to impair or otherwise affect:

transparency concerning

the use of proxy advisors, particularly regarding

[[Page 58505]]

``diversity, equity, and inclusion'' and

``environmental, social, and governance'' investment

practices.

Sec. 5. General Provisions. (a) Nothing in this order

shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department or agency, or

the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget

relating to budgetary, administrative, or legislative proposals.

(b) This order shall be implemented consistent with

applicable law and subject to the availability of

appropriations.

(c) This order is not intended to, and does not,

create any right or benefit, substantive or procedural,

enforceable at law or in equity by any party against

the United States, its departments, agencies, or

entities, its officers, employees, or agents, or any

other person.

(d) The costs for publication of this order shall

be borne by the Department of Labor.

(Presidential Sig.)

THE WHITE HOUSE,

December 11, 2025.

[FR Doc. 2025-23093

Filed 12-15-25; 11:15 am]

Billing code 4510-FN-P