Eighteen Republican members of the Texas congressional delegation have requested an update from the FTC Chairman and Acting US Attorney General on investigations into proxy advisors launched under Executive Order 14366. The intervention comes after courts dealt a series of setbacks to wider efforts to restrict proxy advisors.

The significance of the letter is not the prospect of imminent enforcement action. Rather, it illustrates how efforts to challenge proxy advisors are shifting from legal and regulatory channels toward sustained political pressure.

Actions against proxy advisors make limited progress

Executive Order 14366, issued by President Donald Trump in December, instructed the SEC to review its approach to proxy advisors and the FTC to examine ongoing state antitrust investigations. The Texas representatives have now asked FTC Chairman Ferguson and Acting Attorney General Blanche for an update on those investigations, noting that seven months have passed since the order was issued.

Following the recent launch of the Texas Stock Exchange, calls from SEC Chair Paul Atkins for states to “ensure that their corporate laws do not enable the politicization of shareholder meetings” and the forthcoming midterm elections, the Texas politicians could seeking a momentum shift following several legal victories for proxy advisors.

“The timing of the letter raises some questions,” said Sarah Wilson, CEO of Minerva Analytics. “Agencies with findings typically announce them; agencies without findings, on the other hand, receive letters and PR initiatives. That progress against proxy advisors has been slow is not all that surprising; the legal theories the Executive Order directed the agencies to test have fared badly in court.”

The executive order is not the only front on which proxy advisors have been targeted. Last July, the DC Circuit held that proxy voting advice is not a solicitation under federal proxy rules, closing the route the SEC had pursued since 2020. A month later, Judge Albright in the Western District of Texas preliminarily enjoined Senate Bill 2337 (SB 2337), finding proxy advisors likely to succeed in their constitutional challenge. Against that backdrop, the congressional letter appears less a response to emerging enforcement action than an effort to sustain pressure on investigations that have yet to produce public findings.

Exploring the letter's intent

Two aspects of the letter deserve particular attention. First, it cites the firms' constitutional challenge to SB 2337 as conduct warranting investigation. Two proxy advisors sought judicial review of a state law and obtained a preliminary injunction after a federal judge found their claims likely to succeed. Yet the letter presents that challenge as grounds for federal antitrust scrutiny.

The broader implication is notable: exercising the right to challenge a statute is treated as evidence against the challenger. Minerva also has a direct interest in the case because the injunction protects only the firms that brought the lawsuit. SB 2337 remains enforceable against other proxy advisors covering Texas companies, despite the court finding the law likely unconstitutional on three separate grounds.

The second issue is alleged collusion. The letter notes that proxy advisors opposed eight recent Texas redomicile proposals and suggests coordinated efforts to block moves to the state. Similar recommendations do not necessarily imply coordination; organisations applying comparable methodologies to the same governance issue may reasonably reach the same conclusion.

The underlying debate concerns companies moving to jurisdictions with more management-friendly corporate law, often following adverse outcomes in Delaware courts or shareholder votes. Whether such moves benefit shareholders or executives is precisely the type of question independent research is intended to assess. The theory advanced in the letter risks treating an unfavourable conclusion as evidence of misconduct.

“The chilling intent of the letter is straightforward,” said Minerva Analytics’ Wilson. “With the court cases still running and the investigations still open, a public letter from eighteen members of Congress makes it politically difficult for agencies to close those investigations quietly.

“While they stay open, proxy advisors and their clients face legal costs and pressure to soften policies or research that might attract another referral. Nobody has to win in court for that to change behaviour. Simply being investigated is punishment enough. And the pressure is not easing.”

Pressure shifts from law to politics

That pressure continues. In May, Texas Attorney General Ken Paxton filed a consumer protection suit against a proxy advisor in state court, a route that does not depend on the statute blocked by the federal court.

The timing may also reflect broader debates about corporate redomiciliation. Texas has sought to strengthen its position as a pro-company jurisdiction through initiatives including the launch of the Texas Stock Exchange. Those efforts sit alongside a wider debate over whether moves away from Delaware primarily benefit shareholders or corporate management. The recommendations cited in the congressional letter relate directly to that debate.

The constitutional backdrop remains notable. Compelled-speech arguments have often been used to challenge sustainability-related disclosures as “forced political speech”. They are now proving a significant obstacle to the campaign against proxy advisors. SB 2337 was halted because it required advisors to adopt a state-approved description of their research.

Beyond Texas, the Eleventh Circuit recently struck down key provisions of Florida's Stop Woke Act, reinforcing broader judicial scepticism toward attempts to restrict or compel speech in politically contested areas. Earlier this month, a majority opinion by Judge Britt Grant, a Trump appointee, described the statute as “a breathtaking assertion of power to ban unpopular ideas from public discourse”. While political pressure continues, courts have generally been less receptive to the underlying constitutional arguments.

Investor implications

For asset owners, the key issue is the independence of the research they commission. Many investors, including UK trustees, have fiduciary and statutory obligations relating to financially material ESG considerations and climate-related reporting. Those responsibilities do not disappear because another jurisdiction characterises such analysis differently. The immediate question is no longer whether proxy advisors face political scrutiny, but whether that scrutiny can succeed where regulatory and judicial efforts have struggled. The answer will help determine how independent governance research is produced, challenged and used in the years ahead.