Trump Administration Issues Executive Order Aiming to Curb Influence of Proxy Advisory Firms

On December 11, 2025, President Trump signed an executive order entitled “Protecting American Investors From Foreign-Owned and Politically-Motivated Proxy Advisors.” Directly referencing Institutional Shareholder Services (ISS) and Glass Lewis, the order is predicated on the premise that “proxy advisors regularly use their substantial power 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.” A Fact Sheet released by the administration reinforces the background and purposes of the order. The executive order itself directs the Chairman of the SEC, the Chairman of the Federal Trade Commission and the Secretary of Labor to take a number of rulemaking and investigative actions. With respect to the SEC, the agency is ordered, among other things, to:

• Enforce the antifraud provisions of the federal securities laws with respect to material misstatements or omissions contained in proxy advisors’ proxy voting recommendations;
• Assess whether to require proxy advisors whose activities fall within the scope of the Investment Advisers Act of 1940 to register as registered investment advisers; and
• Direct the SEC staff to examine whether the practice of registered investment advisers engaging proxy advisors to advise on (and following the recommendations of such proxy advisors with respect to) non-pecuniary factors in investing, including, as appropriate, “diversity, equity, and inclusion” and “environmental, social, and governance” factors, is inconsistent with their fiduciary duties.

On December 12, 2025, Nasdaq filed a rule proposal, with immediate effectiveness, that grants it limited discretion to deny initial listing to companies that otherwise meet listing requirements when similar, already-listed companies are the subject of suspicious trading activity. As noted in the proposal filing, “Recently, Nasdaq has observed problematic or unusual trading in certain listed companies. Further, the Commission has imposed temporary trading suspensions . . . on several listed securities based, generally, on concerns about potential manipulation in the securities effectuated through recommendations made to investors by unknown persons via social media to purchase, hold, and/or sell the securities. The Commission stated its belief that these recommendations appear to be designed to artificially inflate the price and volume of the securities and that the public interest and the protection of investors require a suspension of trading in the securities. . . . Nasdaq is concerned about the allegedly manipulative trading taking place in listed securities and that pending applicants, despite meeting all listing requirements, have characteristics similar to those subject to the Commission’s trading suspensions and therefore may be susceptible to similar manipulation.”

Under the new Rule 5101, Nasdaq has authority to deny initial listing based on factors that could make the listed security susceptible to manipulation related to concerns Nasdaq and other regulators have identified with previously listed companies that are similarly situated to the company or based on considerations related to the company’s advisors (including auditors, underwriters, law firms, brokers, clearing firms, or other professional service providers), even where the applicant meets all stated listing requirements.

On December 3, 2025, the New York Stock Exchange (NYSE) filed with the SEC for comment a rule proposal that would cause the exchange to commence delisting proceedings for any listed company whose stock price falls below 25 cents on a particular day. This is in addition to the current $1.00 average over 30 trailing days requirement. It is proposed to be effective October 1, 2026. Driving the change is the NYSE recently seeing “an increasing industry-wide trend of low-priced stocks trading on national securities exchanges. The [NYSE] believes that low priced stocks have a greater chance of being manipulated or experiencing trading volatility. Accordingly, [it] believes it is appropriate to establish a minimum trading price for a security to remain listed on the Exchange. The proposed rule reads, “[E]ffective [October 1, 2026], if a security’s closing price per share is less than $0.25 (the “Minimum Trading Price”) on any trading day, the Exchange shall immediately suspend trading and commence delisting proceedings with respect to such security. A company is not eligible to follow the procedures outlined in Sections 802.02 and 802.03 with respect to the Minimum Trading Price criteria.” SEC approval of the proposed rule is required.

Glass Lewis has released its 2026 Benchmark Policy Guidelines, along with its more narrowly focused 2026 Benchmark Policy Guidelines on Shareholder Proposals and ESG-related issues, introducing several notable changes ahead of the upcoming proxy season. Key Updates for 2026 include:

• Enhanced Pay-for-Performance Evaluation. Glass Lewis has updated its pay-for-performance model to adopt a scorecard-based approach. Instead of assigning a single letter grade (A–F), the model now consists of up to six tests, each receiving an individual rating. These ratings are aggregated on a weighted basis to produce an overall score ranging from 0 to 100. Glass Lewis indicates that this change is intended to provide a more nuanced and transparent assessment of executive compensation alignment with company performance.
• A New Approach to Shareholder Proposals. The firm has updated its language regarding shareholder proposals in light of ongoing and anticipated changes to the U.S. shareholder proposal process. While prior guidance on companies’ treatment of the SEC’s former no-action process has been removed, Glass Lewis maintains that shareholders should have the opportunity to vote on matters of material importance. The policy acknowledges that some proposals may unduly burden companies or cross into board responsibilities, and not all proposals serve long-term shareholder interests. Nonetheless, the firm views the fundamental right of shareholders to submit proposals as critical to effective corporate governance and the economic interests of all shareholders. It notes that its approach may be further revised prior to or during the 2026 proxy season if regulatory developments warrant additional updates.
• Governing Document Changes That Impact Shareholder Rights. Glass Lewis has updated its guidance on situations where boards amend governing documents to reduce or remove key shareholder rights. Such actions may lead to recommendations from the firm against the chair of the governance committee—or, in certain cases, the entire committee. Examples include amendments that:
  • Limit shareholders’ ability to submit proposals;
  • Restrict shareholders from filing derivative lawsuits; or
  • Replace majority voting with plurality voting.
• Mandatory Arbitration Provisions. The firm has introduced guidance on mandatory arbitration provisions within its Benchmark Policy. When reviewing companies’ governing documents after an IPO, spin-off, or direct listing, Glass Lewis will assess whether such provisions or other potentially negative governance provisions are present. If such provisions are included, the firm may vote against the chair of the governance committee or, in certain cases, the entire committee. Additionally, Glass Lewis will generally recommend opposing any bylaw or charter amendment that seeks to adopt mandatory arbitration unless the company provides clear and sufficient rationale and disclosure.
• Amendments to Governing Documents. Glass Lewis has consolidated its approach to amendments to the certificate of incorporation and bylaws into a single section. Proposed amendments will be evaluated on a case-by-case basis, with strong opposition to “bundled” proposals that combine multiple changes under one vote. In general, it will recommend supporting amendments that do not materially harm shareholder interests.
• Supermajority Vote Requirements. The firm has clarified its stance on supermajority voting provisions. Proposals to eliminate these requirements will be assessed individually. While Glass Lewis generally supports removing supermajority thresholds, it recognizes that such provisions may protect minority shareholders when a company has a large or controlling shareholder. In these cases, it may oppose their elimination.

On December 4, 2025, Paul Atkins, Chairman of the Securities and Exchange Commission (SEC or the Commission), addressed the SEC’s Investor Advisory Committee meeting. His speech focused on the rise of public blockchains and tokenization, noting that these technologies have the capacity to streamline not only trading but the entire issuer-investor relationship. He expressed the view that “Congress has given the SEC broad exemptive authorities under the Securities and Exchange Act of 1934, and [the Commission] must use these authorities responsibly. A thoughtful exemptive framework—cabined, time limited, transparent, and anchored in strong investor protections—could allow the markets to develop on-chain models and give investors innovative new choices. And, drawing on input from market participants, [the Commission] will be able to craft rules that distinguish between truly decentralized finance and the wide spectrum of centralized, on-chain finance in existence today.” We can anticipate the SEC to issue a rule proposal on this topic in the coming months.

On December 5, 2025, the SEC’s Division of Corporation Finance (the Division) released updates to its Financial Reporting Manual (FRM). The FRM was originally prepared by the staff of the Division to serve as internal guidance. In 2008, in an effort to increase transparency of informal staff interpretations, the Division posted a version of the FRM on its website. Because of its informal nature, the FRM does not necessarily contain a discussion of all material considerations necessary to reach an accounting or disclosure conclusion and is non-authoritative. That said, it does provide valuable insight into how the Division views certain matters. The release associated with the latest updates states that the Commission is adopting the changes to enhance investor protections in initial public offerings by special purpose acquisition companies (SPACs) and in subsequent business combination transactions between SPACs and private operating companies (de-SPAC transactions). The key changes affect, among other things, the definition of “significant subsidiary” and generally applicable financial statements for acquired businesses; Rule 3-05 financial statement requirements for registration statements and proxy statements; financial statements related to acquired real estate operations; pro forma financial information adjustment criteria and presentation requirements and amendments to financial disclosures specific to investment companies.

On December 5, 2025, the SEC announced it had consented to modifications to the October 2003 and September 2004 final judgments against settling firms still covered by the Global Research Analyst Settlement, a global settlement of enforcement actions brought by the SEC and other governmental bodies against twelve investment banks. The modifications are subject to court approval. The settlements resolved a hot button issue in the early 2000’s involving conflicts of interest between research analysts and investment banking personnel within registered broker-dealers. In essence, they required investment banks and other broker-dealers to wall off research analysts from investment banking by undertaking several prescriptive measures. This led to dramatic changes in the way research has been conducted on Wall Street. SEC Commissioner Mark Uyeda issued a statement on the action taken by the Commission’s Division of Enforcement that suggests the underlying reasoning behind the consent. He expressed the view that “It’s not a coincidence that since 2004, there has been a lot less research out of Wall Street, particularly for small and medium-sized companies. The result has been a chilling effect on research coverage in precisely the segments—emerging growth and smaller public companies—where investors most need high quality analysis.” In light of new rules put in place by FINRA and other regulations, he suggests that the requirements of the global settlement no longer hold their relevance.

On December 10, 2025, the U.S. House of Representatives passed an omnibus defense budget bill, and the Senate passed the bill on December 17, 2025. Included in the legislation, under the title the “Holding Foreign Insiders Accountable Act,” are amendments to Section 16(a) of the Securities Exchange Act of 1934. The amendments would extend the Section 16(a) reporting requirements to directors and officers of foreign private issuers (FPIs). This would be required to become effective within 90 days of passage of the law. Under the current FPI regime, there is no Section 16 reporting obligation for those persons. Of note, the SEC Concept Release on Foreign Private Issuer Eligibility did not address removing or altering the Section 16 exemption applicable to FPIs. The legislation needs to be signed by the President before it would take effect.

The Depository Trust and Clearing Corporation (DTCC) plays a central role in the public securities markets by providing clearing and settlement services. DTCC describes its role as “settl[ing] most U.S. securities transactions, a crucial step in completing trades.” In a letter dated December 11, 2025, DTCC requested that the staff of the Division of Trading and Markets of the SEC confirm that it would not recommend that the Commission take enforcement action against the Depository Trust Company (DTC), DTCC’s depository company subsidiary, for violations of various securities laws and regulations in connection with DTC’s development and launch of a preliminary version of a securities tokenization program that would allow DTC participants to elect to have their security entitlements to DTC-held securities recorded using distributed ledger technology, rather than exclusively through DTC’s current centralized ledger.

In doing so, the program aims to give participants the ability to leverage the benefits of blockchain and tokenization technology, including mobility, decentralization, and programmability, without foregoing the protection and accountability that a central securities depository and registered clearing agency provides. According to the no action request, “DTC views the [pilot program] as a step to a broader goal [of providing] useful insights to market participants and the Commission regarding how the various [legal and regulatory requirements] may be applied in a ‘sensible manner’ to a recordkeeping arrangement involving distributed ledger technology. On that same day, the SEC issued the requested no action letter. The initial request and no action letter are available here. In a statement, Commissioner Hester Peirce noted, “Although this program is a pilot subject to various operational limitations, it marks a significant incremental step in moving markets onchain...I am looking forward to seeing how DTC’s participants benefit from this program and the extent to which DTC’s tokenization model can enhance the functioning of our securities markets.”