The ISS-Glass Lewis Duopoly: It Takes Two to Mangle

November 16th, 2023

The Wall Street Journal reports that the American Council for Capital Formation (ACCF) reveals that companies hit the ISS-Glass Lewis duopoly with at least 64 complaints to the SEC about inaccurate proxy adviser recommendations.

The article reads: “As the ACCF report notes, these complaints are likely the tip of the iceberg, ‘because companies—unlike proxy advisors—must assume legal liability to submit a filing’ to the SEC.” What’s more, The Journal editorial board reports, the “ACCF documents proxy advisers’ numerous errors, which stem from a combination of sloppiness and one-size-fits-all voting guidelines that ‘fail to capture the nuance’ about specific company issues.”

The point made by The Journal is that the Institutional Shareholder Services and Glass Lewis will not have to face the music the way their clients would because they “enjoy a government-protected duopoly” that promotes “the progressive agenda against corporate America.”

I would add one other note. Not only are ISS and Glass Lewis protected by the SEC. They are also protected by the Federal Trade Commission and Department of Justice Antitrust. Think about it: Here are two firms that hold 90 percent of the proxy advisory market and provide services riddled with errors. If ever there were a solid antitrust case under existing law, this one is it.

Don’t expect the Chairman of the SEC, the head of DOJ Antitrust, and the Chair of the FTC, however, to take a huddle on this one the next time they rub shoulders in the West Wing. They both know who’s got their political backs.