On December 11, 2025, President Trump issued an executive order with the stated purpose of increasing oversight and public confidence in the proxy advisor industry. The order cites as its focus proxy advisers’ alleged advancement of “diversity, equity, and inclusion” (DEI) and “environmental, social, and governance” (ESG) agendas. The order directs the Chairs of the SEC and the CFTC, and the Secretary of Labor, to review and revise applicable regulations, guidance and other directives, and to conduct investigations and examinations consistent with the purpose of the order.
The executive order directs the SEC Chairman to review, and consider revising or rescinding, rules, regulations, guidance, bulletins and memoranda relating to proxy advisers and shareholder proposals (e.g., Rule 14a-8 under the Securities Exchange Act of 1934) that are inconsistent with the stated purpose of the order, especially to the extent they implicate DEI and ESG policies. The order also directs the SEC Chairman to, among other things, assess whether to require proxy advisors whose activities fall within the scope of the Investment Advisers Act of 1940 and the rules promulgated thereunder to register as investment advisers; consider requiring proxy advisors to provide increased transparency relating to their recommendations, methodology and conflicts of interest, especially regarding DEI and ESG factors; and direct SEC staff to examine whether registered investment advisers’ engagement of proxy advisers for advice on non-pecuniary investment factors, including DEI and ESG, is inconsistent with their fiduciary duties.
The executive order directs the FTC Chairman to determine if there is a “probable link” between the conduct underlying State-level antitrust investigations into proxy advisors and violations of Federal antitrust law, and to investigate whether proxy advisors engage in unfair competition or unfair or deceptive acts or practices.
The executive order also directs the Secretary of Labor to revise regulations and guidance regarding the fiduciary status of proxy advisors and other individuals who advise others who manage the voting rights belonging to shares that are held by retirement plans covered under the Employee Retirement Income Security Act of 1974 (ERISA). The order further directs the Secretary to assess “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” and to enhance transparency relating to the use of proxy advisors, particularly in relation to DEI and ESG practices.
