On June 20, 2025, Texas passed SB 2337, a first-of-its-kind regulation of proxy advisors such as ISS and Glass Lewis. SB 2337 requires proxy advisors to, among other things, disclose when their recommendations are based, in whole or in part, on nonfinancial factors such as ESG and DEI.
On July 24, 2025, ISS and Glass Lewis each filed a lawsuit against Texas Attorney General Ken Paxton in Texas federal court. They argue, among other things, that the law infringes on their First Amendment rights. The lawsuits seek a preliminary injunction against the Texas Attorney General in advance of the law going into effect on September 1.
On August 22, 2025, the Texas Stock Exchange and the Texas Association of Business filed a motion to intervene as defendants in the lawsuit. They contend that SB 2337 is constitutional under the First Amendment because the proxy advisors' advice is false and misleading commercial speech, and therefore is afforded no constitutional protection.
The court has set a hearing to decide the preliminary injunction on August 28, 2025.
Jones Day is representing TXSE and the Texas Association of Business in the lawsuit.
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