US Department of Labor applauds President Trump’s bold directive to reign in politicization of capital markets by proxy services

News Release

US Department of Labor applauds President Trump's bold directive to reign in politicization of capital markets by proxy services

WASHINGTON - The U.S. Secretary of Labor Lori Chavez-DeRemer and Deputy Secretary of Labor Keith Sonderling applauded President Trump's latest Executive Order, "Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors."

The department's Employee Benefits Security Administration, which ensures the security of the retirement, health, and other job-based benefits of America's workers and their families, will execute the President's goal of restoring order to financial markets, including retirement investing, by curbing politicized corporate voting patterns pushed by proxy advisory firms.

The Executive Order singled out two foreign companies that control more than 90% of the proxy advisory market, stressing that Institutional Shareholder Services Inc. and Glass, Lewis & Co. LLC wield too much influence, which they use "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."

"I applaud the President's action to protect American investors by bringing transparency, competition, and accountability to the proxy services market," said Secretary Chavez-DeRemer. "This bold directive will benefit millions of American workers and retirees who have unknowingly had their investment decisions hijacked by foreign actors with misguided motivations. The Labor Department stands ready to carry out the President's directive, and we will continue fighting to secure the hard-earned capital of American workers."

"Americans want their retirement capital to advance good governance, promote American exceptionalism and, above all, get results. Unfortunately, some firms have weaponized this to advance politically motivated social causes unmoored from financial returns," said Deputy Secretary Sonderling. "The President directed us to review the fiduciary responsibilities of proxy advisory, and we will meet that mission by continuing to protect Americans' investments."

Specifically, the Executive Order directs the Secretary of Labor to determine whether "any proxy advisor … 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." The Executive Order also directs the Securities and Exchange Commission and the Federal Trade Commission to look at their respective authorities to curb the damage the ISS and Glass Lewis duopoly have wrought on Wall Street and Main Street.

Read the full Executive Order, "Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors."

Read the White House Fact Sheet on the EO here.