On September 4, the SEC filed a rare subpoena-enforcement action in the U.S. District Court for the Eastern District of Pennsylvania against Institutional Shareholder Services (ISS) — the firm that, alongside one competitor, controls more than 90% of the U.S. proxy advisory market. The SEC's ask is narrow: force ISS to produce voting-recommendation data it has refused to hand over for four months. But the case is a clean, real-time illustration of something every registered adviser should pay attention to — not because of what ISS does, but because of what it is. ISS has been an SEC-registered investment adviser since 1997, the same status held by virtually every RIA reading this.
How a routine exam request became a federal lawsuit
The timeline in the SEC's court filing runs longer, and escalates further, than most exam disputes ever do.
Why ISS's objections didn't work — and won't work for anyone else
The SEC's brief walks through each of ISS's arguments, and the reasoning applies well beyond this one case:
- Confidentiality isn't a shield against your own regulator. The SEC pointed out that ISS's own privacy notice already discloses that client information "may be disclosed to our regulators (e.g., the United States Securities and Exchange Commission)." A firm's confidentiality commitments to clients don't override its production obligations to the SEC — and typically already say so, if you read the fine print.
- Anonymized data isn't a substitute for the data requested. ISS offered to strip client identifiers before producing voting records. The SEC's response: you can't test whether a firm gave different clients different advice, or whether it followed each client's specific instructions, if you can't tell which record belongs to which client. A workaround that defeats the purpose of the request isn't compliance.
- "This request is about our protected speech" doesn't work against routine registrant oversight. ISS argued the subpoena amounted to retaliation for its public positions. The court filing's response is a useful line for any CCO: a firm's policy views don't exempt it from examination of whether it's meeting its legal obligations to clients.
How Compliers Can Help
We help firms pressure-test whether their document-production and recordkeeping systems could actually meet a real exam request — not the version everyone hopes for, but the full-scope version an examiner is entitled to ask for. Learn more about our Exam Readiness engagement.
Why this matters even if you'll never see a subpoena like this
Almost no firm will end up in federal court over an exam request. But the ladder ISS climbed — a routine document ask, treated as negotiable, that becomes a slow-walk, that draws Enforcement's attention to the non-production itself, that becomes a formal investigation — is a ladder any firm can climb by accident. The SEC's brief is blunt about the sequence: "ISS has wasted enough time and resources." Examiners read a firm's response to a document request as its own kind of disclosure about how the firm operates.
Two practical takeaways sit underneath the legal ones. First, a sample or summary offered in place of full production only works if the examiner accepts it as sufficient — once they've told you it isn't, continuing to offer variations on the same workaround reads as delay, not cooperation. Second, "we'll produce it, just anonymized" sounds like a compromise but functions as a refusal if it defeats what the examiner is actually trying to verify — worth asking, before proposing it, whether it would.
What to do right now
- Confirm your records and document-production procedures can actually produce a full, client-identified data set on an examiner's timeline — not just a representative sample.
- Check what your own privacy notices and client agreements say about disclosure to regulators. If they already carve out regulatory production (most do), that undercuts any future confidentiality objection your firm might otherwise be tempted to raise.
- If a request genuinely seems overbroad, negotiate scope quickly and in writing — don't let it drift for months while the stated concern keeps changing.
- Loop in outside counsel the moment a routine exam ask starts to involve Enforcement staff. That's a different track, with different stakes, than a standard exam response.