Key Points:
Regulatory Escalation: Trump executive order December 2025 → SEC examination and July 21 subpoena → Federal lawsuit filed Friday in the Eastern District of Pennsylvania.
Market Concentration: ISS alone advises on roughly $26.8 trillion in assets across 144 fund families, and together with Glass Lewis controls up to 97% of the U.S. proxy advisory market.
Forward Risk: If the SEC prevails on disclosure, the methodology guiding more than $5 trillion in robovoted assets could be forced into public view, ending a four-decade black box that has shaped CEO pay, board composition, and shareholder proposals.
Institutional Behavior: Stanford and Ohio State researchers documented 114 institutions voting in lockstep with ISS and Glass Lewis over 95% of the time, a pattern the study labeled robovoting.
I can't stop thinking about what happened in a Philadelphia courthouse Friday.
The SEC sued a firm most people have never heard of. They want its secret playbook. The one that tells the world's biggest fund companies how to vote your shares.
You own Vanguard. Or Fidelity. Or BlackRock. Or State Street. Your 401(k), your IRA, maybe your kid's college fund. Every year those shares get voted. On CEO pay. On board seats. On big company fights. You don't vote them. Two firms do. And you've probably never heard of either one.
Elon Musk walked away from the biggest IPO in history with a massive "war chest."
Now he's spending it to complete his dynasty...
He's already purchased a $40 billion AI firm. And a $1 billion turbine company.
But his next three moves are the ones that could double your money overnight.
The main one is called ISS. Institutional Shareholder Services. Based in Rockville, Maryland. Owned by a German stock exchange called Deutsche Börse. Let that sink in. A German-owned firm tells American funds how to vote American shares. ISS runs voting advice for 144 fund families. Together those funds hold about $26.8 trillion in assets.
The other firm is Glass Lewis. The two of them control up to 97% of this whole business. Two firms. That's the market.
Here's what worries me. A study out of Stanford and Ohio State looked at how the big funds actually vote. They found 114 huge institutions just do whatever ISS says. Over 95% of the time. More than $5 trillion in assets on autopilot. The researchers gave it a name. Robovoting.
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So when ISS says reject a CEO pay package, the funds reject it. When ISS says vote out a board member, the board member is out. When ISS backs a shareholder proposal on climate or diversity, it passes. Your money moves. You never knew.
Elon Musk called ISS "corporate terrorists" after they came out against his Tesla pay deal. That was a trillion-dollar package. Shareholders voted it down partly because ISS told them to. Jamie Dimon at JPMorgan called them "incompetent." I don't always agree with those two. But they've been screaming about this for years. Nobody listened.
Think about how this works in real life. You hand your money to a mutual fund. The fund manager is supposed to work for you. But when it's time to vote, he doesn't sit down and read the proxy. He calls ISS. Or he just clicks whatever ISS recommends. It's cheaper. It's faster. And if things go sideways, he can point at ISS. It wasn't me. I followed the advice.
That's how a $26.8 trillion voting bloc gets pointed by one company in a Maryland office park.
Trump signed an executive order last December. He told the SEC and the Federal Trade Commission and the Labor Department to go after these firms. He said they push political agendas. Things like DEI. Things like ESG. Stuff a lot of shareholders never signed up for and never voted on.
The SEC opened a quiet examination in March. Sent a formal subpoena on July 21. ISS refused to hand anything over. They said the First Amendment protects them. Their voting advice is speech, they said, and the government can't force them to explain the recipe.
Friday, the SEC took them to federal court in Pennsylvania.
I get it. The First Amendment is serious. Maybe ISS wins the case. Maybe they don't. But I don't think most people realize what just cracked open. Forty years. That's how long these two firms have quietly shaped American companies. Which CEOs stay. Which boards change. Which social causes get pushed through your portfolio. Two firms. From offices you've never visited. Voting shares you thought were yours.
$26.8 trillion. One firm. That's the number I can't get out of my head. Say it out loud at the dinner table tonight. See how it lands.
Here's the part that gives me a chill. Nobody knows how this ends. The suit could drag for years. ISS could win on speech grounds and nothing changes. Or the SEC could pry the black box open and everything changes. Either way, the quiet part is loud now.
Your retirement money has been voting a certain way. You never got a say. That's the truth. And Friday, someone finally said it out loud in a courtroom.
More on this tomorrow.
— American Ledger
