The U.S. Department of Labor has expressed support for President Trump's Executive Order aimed at reducing the influence of foreign-owned proxy advisory firms in capital markets. Secretary of Labor Lori Chavez-DeRemer and Deputy Secretary Keith Sonderling praised the order, titled "Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors." The order targets Institutional Shareholder Services Inc. and Glass, Lewis & Co. LLC, which control a significant portion of the proxy advisory market.
Chavez-DeRemer said, "I applaud the President’s action to protect American investors by bringing transparency, competition, and accountability to the proxy services market." She emphasized that this directive will benefit American workers and retirees who may have been affected by foreign entities with different priorities.
Deputy Secretary Sonderling added that Americans expect their retirement funds to focus on good governance and financial returns rather than political agendas. He noted that some firms have used their influence to promote social causes unrelated to financial outcomes.
The Executive Order tasks the Secretary of Labor with determining if proxy advisors providing paid advice are considered investment advice fiduciaries under ERISA. Additionally, it instructs the Securities and Exchange Commission and the Federal Trade Commission to examine their roles in addressing issues caused by these firms.
