SALT LAKE CITY, UTAH – Attorney General Sean D. Reyes joined a letter, led by the State of Iowa, to America’s largest proxy voting advice businesses, Institutional Shareholder Services (ISS) and Glass Lewis. The correspondence seeks a commitment from the two entities to follow the law and uphold their fiduciary duties to consumers by ensuring transparency and accountability for politically motivated “debanking” efforts.
In their letter, the attorneys general write that ISS and Glass Lewis “must give sound proxy advice to comply with federal and state law and its contract obligations” and that the businesses “may be violating their legal duties by opposing transparency-in-debanking proposals.”
As the States write, “Non-economic debanking efforts by financial institutions appear to be on the rise. Pressure on financial institutions to reject neutrality on issues including the Second Amendment, oil and gas exploration, immigration, and prison reform is well documented. Law-abiding citizens and companies should not have to fear political retaliation from banks motivated by activist investors.”
Earlier this year, Attorney General Reyes led a 21-state coalition challenging the ESG practices of these two companies. Attorney General Reyes explained how ESG considerations are affecting ISS’s and Glass Lewis’ proxy voting recommendations in ways that conflict with the financial interests of their clients.
Attorney General Reyes also testified before the House Committee on Oversight and Accountability, speaking on the critically important issue of how ESG factors are distorting the American financial system and harming consumers. His written testimony urged the Committee to investigate the actions of proxy advisory firms to ensure their actions are consistent with federal laws that prohibit recommendations from including false or misleading information. [link to written testimony?]
Joining Utah and Iowa on this most recent letter were the States of Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Kansas, Louisiana, Missouri, Mississippi, Montana, Nebraska, New Hampshire, North Dakota, Oklahoma, South Carolina, Texas, Virginia, West Virginia, and Wyoming.