Following up on our recent post analyzing Texas’s new proxy advisor disclosure statute, S.B. 2337, we note a significant development: On August 29, 2025, Judge Alan Albright of the United States District Court for the Western District of Texas issued a preliminary injunction temporarily preventing the Texas Attorney General from enforcing the law against major proxy advisory firms Institutional Shareholder Services Inc. (ISS) and Glass, Lewis & Co. (Glass Lewis).
The Court’s order prohibits the Texas Attorney General and his staff from taking any action to enforce S.B. 2337 against Glass Lewis and ISS, including intervention in private litigation. The order follows legal challenges raised by both firms, which argued that S.B. 2337’s disclosure requirements amount to unconstitutional compelled speech, a concern we highlighted in our original article.
As further outlined in our original article, S.B. 2337 would have required proxy advisory firms servicing Texas companies to notify shareholders and companies whenever a voting recommendation was not based solely on financial interests — specifically flagging advice incorporating environmental, social, governance (ESG), diversity, equity and inclusion (DEI) factors — and also mandated prominent website disclosures and detailed economic analyses for recommendations opposing management or providing materially different advice to clients.
As the litigation develops, we recommend continuing to review internal governance and proxy advisory relationships to mitigate risk and ensure timely adaptation to any final requirements imposed by the court.