Two-track enforcement — federal PI ‖ state DTPA

As of May 20, 2026, proxy advisors are now parties in state-regulation, federal-litigation, issuer-rebuttal, and conflict-of-interest disputes. Two doctrinally distinct enforcement tracks now run in parallel. Figure 4 maps each.¹¹

5.3  Developments after this edition’s cycle (May 27 – August 5, 2026)

Kansas. On June 24, 2026, Judge Holly Teeter of the District of Kansas granted consolidated preliminary injunctions in Institutional Shareholder Services Inc. v. Kobach, No. 2:26-cv-02254, and Glass, Lewis & Co., LLC v. Kobach, No. 2:26-cv-02286, barring enforcement of Kansas’s S.B. 375, the Proxy Advisory Transparency Act: “SB 375 discriminates on viewpoint because it imposes burdens when Plaintiffs’ speech disagrees with the view of company management but imposes no burdens when Plaintiffs’ speech agrees.” Memorandum & Order (D. Kan. June 24, 2026); ESG Dive coverage.

Indiana. ISS filed its own Southern District of Indiana challenge to H.B. 1273 in April 2026, alongside Glass Lewis’s April 30 complaint; in late June 2026, Judge Matthew Brookman preliminarily enjoined H.B. 1273 — the third federal preliminary injunction against a state proxy-advisor statute in twelve months, after Texas and Kansas. Reuters (June 29, 2026) via Insurance Journal (order copy, June 26, 2026).

The state consumer-protection track is wider than Texas. The first state enforcement action actually predates the Collin County petition: on November 20, 2025, the Florida Attorney General sued both ISS and Glass Lewis in Florida’s 14th Judicial Circuit under the state’s consumer-protection and antitrust laws, seeking civil penalties, injunctive relief, and restitution. Fla. Att’y Gen. News Release (Nov. 20, 2025). Six states are reported to have enacted proxy-advisor-related statutes in the 2025–26 cycle (Texas, Kansas, Indiana, Kentucky, Oklahoma, and Tennessee — per litigation filings and press accounts; a statute-by-statute registry with primary links is queued, § 9); three (Texas, Kansas, Indiana) are under federal preliminary injunction.

The Texas Senate hearing and the ISS letter. On June 23, 2026, the Texas Senate Committee on State Affairs held an interim hearing on S.B. 2337 implementation; Gibson Dunn testimony detailed analytical errors in advisor reports on Texas redomestications, including a misreading of the disjunctive books-and-records standard and a description of the optional 3% derivative-suit ceiling as a flat requirement. ISS declined to appear by letter dated June 19, 2026, citing its active W.D. Tex. litigation (letter on file with SMU CGI); Glass Lewis did not respond. The ISS letter also states that ISS administers approximately 500 voting policies, more than 450 of them client-customized, and that roughly 90% of the shares it processed in 2024 were voted under custom policies — the strongest available counter-consideration to Category 3 of the conflict taxonomy below, and one this tracker records as ISS’s own account.

Federal executive and legislative developments. Executive Order 14,366, “Protecting American Investors From Foreign-Owned and Politically-Motivated Proxy Advisors” (signed Dec. 11, 2025), directs SEC action on proxy-advisor regulation, 90 Fed. Reg. 58,503 (Dec. 16, 2025); and H.R. 8286 (119th Cong.), the Protecting Americans’ Retirement Savings From Politics Act (Steil), advanced through the House Financial Services Committee in 2026, bill text.

The federal antitrust posture moved. On August 5, 2026, the Department of Justice withdrew the 1987 business review letter in which its Antitrust Division had told ISS it did not intend to challenge the firm’s then-described business — a business the 1987 letter recorded as one that “will not provide advice or engage in discussions with respect to the corporate operations or business activities” of the companies it rates. The Division’s stated grounds: ISS’s subsequent expansion into corporate consulting falls outside the scope of the 1987 representations, and ISS and Glass Lewis together control more than 90 percent of the proxy-advisory market — the third government attribution of that figure, and the first from federal antitrust authorities. DOJ release (Aug. 5, 2026). Precision matters: this is a withdrawal of a no-action posture, not an investigation or an enforcement action, and the release does not treat proxy advising as inherently problematic. Its significance for this page is structural: the consulting-conflict concern that anchors Category 1 of the taxonomy above — and enumerated disclosure 1 of the design schematic in § 10 — is now the stated concern of the Antitrust Division, in the Division’s own words.

5.1 · Track A — federal challenge. On July 24, 2025, the two firms filed parallel federal challenges in the U.S. District Court for the Western District of Texas: Institutional Shareholder Services Inc. v. Paxton, No. 1:25-cv-01160-ADA (W.D. Tex. filed July 24, 2025) (Albright, J.); and Glass, Lewis & Co., LLC v. Paxton (W.D. Tex. filed July 24, 2025) (Albright, J.) (companion challenge; Glass, Lewis & Co., LLC v. Paxton, No. 1:25-cv-01153-ADA (W.D. Tex.) (Albright, J.)).¹² On August 29, 2025, Judge Alan D. Albright issued preliminary injunctions blocking enforcement of S.B. 2337 against the two named plaintiffs. The injunctions are firm-specific — they enjoin the Attorney General and his agents from enforcing the statute as to ISS and Glass Lewis; they do not facially enjoin S.B. 2337 against other proxy advisors (e.g., Minerva Analytics, Egan-Jones, smaller players), and they do not bar private-plaintiff enforcement actions.¹³ Status as of 2026-08-05: the February 2, 2026 trial setting did not proceed; the preliminary injunction remains in effect and no new trial date has been set.

5.2 · Track B — state DTPA petition. On May 20, 2026, the Office of the Texas Attorney General announced suit against ISS in Collin County District Court (petition PDF). The petition is docketed as Cause No. 471-03459-2026 (471st Judicial District Court, Collin County; Judge Robert “Bryan” Gantt, per The Texas Lawbook). The Texas filing was one arm of a coordinated four-state campaign: the Nebraska, Iowa, and West Virginia attorneys general filed parallel consumer-protection suits against ISS in their own courts the same day (the West Virginia complaint, CC-17-2026-C-113, Circuit Court of Harrison County, alleges deceptive trade practices under the state’s Consumer Credit and Protection Act). The petition is brought under the Texas DTPA and TBOC registration provisions, and alleges that ISS misled institutional investors and public companies by issuing voting recommendations that, in the State’s framing, prioritize political agendas over financial principles and fiduciary duty. The State seeks a temporary restraining order, temporary and permanent injunctive relief, civil penalties up to $10,000 per violation (the DTPA § 17.47(c) ceiling), and total monetary relief greater than $1,000,000.¹⁴ The State’s pleadings are allegations, not adjudicated findings.

06 The eleven-month timeline

June 20, 2025 (S.B. 2337 signed) → May 20, 2026 (Texas AG v. ISS)

Twelve events across seven institutional actors define the regulatory and litigation arc this vertical tracks. Figure 2 plots each in chronological order; the actor lanes (Legislature / Plaintiffs / Court / Firm / Texas AG / Investors / Issuer) make visible which institutional party initiated which move.¹⁵