Deutsche Börse AG will support the lawsuit of recently acquired unit Institutional Shareholder Services Inc. against the U.S. Securities and Exchange Commission over a ruling by the regulator aimed at limiting the influence of proxy advisers such as ISS, the Financial Times reported Nov. 21.
The German stock exchange operator recently agreed to acquire an 80% stake in ISS in a deal valuing the proxy adviser at roughly €1.93 billion. The acquisition will allow ISS CEO Gary Retelny to remain at the helm of the company.
Retelny told the newspaper that Deutsche Börse was "very familiar" with the suit, wherein ISS is challenging the SEC's rules that require proxy advisers to disclose conflicts of interests. ISS first took legal action in 2019 but halted it in February. It reactivated the lawsuit six months later after the regulator cleared the rules in July, according to the report.
The ISS suit faces a challenge after the U.S. National Association of Manufacturers filed a motion to intervene on behalf of the SEC, a move that Retelny said was surprising. There is a possibility that U.S. President-elect Joe Biden could overturn the SEC ruling when he officially takes office, but Retelny said ISS will pursue legal action nonetheless, the FT added.