Previously, I blogged on the SEC’s attempt to subpoena ISS. This subpoena seeks to compel the organization to disclose its clients over the last four years and their voting records. ISS battled these disclosures over the summer when the SEC attempted to use an administrative subpoena to obtain the information. This led the SEC to file for a judicial subpoena in the Eastern District of Pennsylvania. Now ISS is challenging the SEC subpoena. In its response brief, ISS argues a variety of theories:
“The SEC’s subpoena seeks millions of lines of data showing how over 1,000 institutional investors voted on every shareholder vote in ProxyExchange—including votes on hot-button economic, political, and social issues—over a nearly four-year period. Compelling disclosure of that data would severely burden the free speech and associational rights of both ISS and its clients…
even the limited evidence in the public record shows that the SEC’s inquiry is part and parcel of a retaliatory campaign against ISS’ exercise of its First Amendment-protected speech rights, rather than a good-faith investigation into ISS’ compliance with federal securities law. That alone is enough to deny the application. Further, the SEC’s request is overbroad and seeks irrelevant materials. ISS has complied or is in the process of complying with each and every SEC request except the SEC’s demand for data which would allow the SEC to match particular clients to particular votes. The SEC has not asserted even a plausible need for that discrete category of information”
ISS has had luck fighting anti-ESG in the state courts, seeing several laws enjoined on compelled speech grounds. We’ll see if similar First Amendment arguments work against the SEC.
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