President Trump issues Executive Order instructing DOL to consider treating proxy advisory firms as ERISA advice fiduciaries

On December 11, 2025, President Trump issued an Executive Order “Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors.” The EO focuses on the (in the view of the EO, sometimes negative) role proxy advisors play in affecting corporate policy with respect to DEI and ESG issues. It directs the Securities and Exchange Commission, the Federal Trade Commission, and the Department of Labor (with respect to “Pensions and Retirement Plans”) to “increase oversight of and take action to restore public confidence in the proxy advisor industry, including by promoting accountability, transparency, and competition.”

With respect to ERISA-covered retirement plans, the EO instructs DOL “to consider” revising the current advice fiduciary regulation (which as we recently discussed is likely to be withdrawn after a Texas District Court stayed its effect) to explicitly include proxy advisors as ERISA advice fiduciaries.

In this note, we briefly discuss the EO’s overall “theory of the case” and the instructions to SEC and FTC. We then describe the EO’s ERISA-related instructions to DOL.

Purpose

The EO targets Institutional Shareholder Services Inc. and Glass, Lewis & Co., LLC, proxy advisors who (it says) “control more than 90 percent of the proxy advisor market, advise their clients about how to vote the enormous numbers of shares their clients hold and manage on behalf of millions of Americans in mutual funds and exchange traded funds,” and who “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.”

SEC and FTC

The EO instructs the SEC to (among other things) consider revising or rescinding rules/guidance with respect to proxy advisors “that are inconsistent with the purpose of this order, especially to the extent that they implicate ‘diversity, equity, and inclusion’ and ‘environmental, social, and governance’ policies.” The EO specifically identifies guidance “relating to shareholder proposals” and “Federal securities laws’ anti-fraud provisions.”

It instructs the FTC to “review ongoing State antitrust investigations into proxy advisors and determine if there is a probable link between conduct underlying those investigations and violations of Federal antitrust law,” and to investigate “whether proxy advisors engage in unfair methods of competition or unfair or deceptive acts or practices that harm United States consumers.”

We note that, in this regard, on May 22, 2025, the FTC filed a “Statement of Interest” (supporting the plaintiff-States) in a lawsuit by 11 “Red States” against BlackRock, State Street, and Vanguard (alleged to be, via the index funds they manage, “the three largest shareholders of America’s publicly-held coal companies”), claiming that “Defendants agreed to use their combined shares in competing coal companies to reduce production of coal in the United States, thereby driving down output and driving up prices.”

Instructions to DOL

Finally, the EO instructs DOL to:

[R]evise all regulations and guidance regarding the fiduciary status of individuals who manage, or, like proxy advisors, advise those who manage, the rights appurtenant to shares held by plans covered [by ERISA and] … consider whether these proposed revisions should include amendments to specify that any individual who has a relationship of trust and confidence with their client, including any proxy advisor, and who provides advice for a fee or other compensation, direct or indirect, with respect to the exercise of the rights appurtenant to shares held by ERISA plans, is an investment advice fiduciary under ERISA.

To repeat: the President is (among other things) instructing DOL “to consider” revising the current advice fiduciary regulation to explicitly include proxy advisors as ERISA advice fiduciaries.

In addition, DOL is 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 take “appropriate action to enhance transparency concerning the use of proxy advisors, particularly regarding ‘diversity, equity, and inclusion’ and ‘environmental, social, and governance’ investment practices.”

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The EO demonstrates the high priority reform of proxy voting has for the Administration, especially because of the effect ESG-influenced proxy voting and shareholder initiatives have had on the energy sector. The Trump 1.0 Administration made this clear in its April 10, 2019, Executive Order on “Promoting Energy Infrastructure and Economic Growth.” And the recent corporate ESG litigation in Spence v. American Airlines also focused on a shareholder initiative (with respect to Exxon) in the energy sector.

Of course, this sort of broad EO will only amount to so much hand waving unless DOL (and the SEC and FTC) take action to implement it in a way that actually changes current practice. In that regard it is possible that the new head of DOL’s Employee Benefit Security Administration (EBSA), Daniel Aronowitz, will take a more aggressive approach to these issues than did, e.g., DOL leadership under Trump 1.0.

We will continue to follow this issue.