DOJ retires the 1987 letter that underwrote ISS's antitrust comfort

The 1987 letter was worth less as a legal shield than its 39-year run suggests ^[16]. Under 28 C.F.R. 50.6, a business review letter is fact-specific, applies only to the party that asked and the conduct described in the request, and states only the Division's enforcement intentions as of the date it was written, leaving the Division free to act later if it concludes the public interest requires it ^[6]. The 1987 letter said the Division had "no current intention" to challenge ISS's establishment and operation, on the understanding that ISS would advise only on voting rights and corporate governance and would not advise on or discuss corporate operations or business activities ^[7]. Withdrawal removes that citation, which is all the letter ever gave ISS to point to.

The stated ground for withdrawal is a factual mismatch rather than a theory of harm. The Division observed that ISS now offers corporate consulting services, contradicting the premise the letter rested on ^[8], and separately noted that ISS and Glass Lewis together control more than 90% of the proxy advisory industry, which it said raises significant competition concerns given their alleged influence over governance at America's largest companies ^[9]. Those are two different complaints: one about what a firm sells to the companies it rates, one about how few firms there are to do the rating. Only the first is something an adviser can cure by reorganising itself.

The Division was explicit that the withdrawal is not an enforcement action and not a finding that ISS violated the antitrust laws ^[2], that proxy advising is not inherently problematic, and that voting in line with a proxy adviser's recommendation does not by itself raise competition concerns ^[3]. It identified no violation and announced no investigation ^[10]. Morrison & Foerster's reading is that the move signals increased scrutiny of ISS and perhaps the broader asset management industry, especially during next year's proxy season ^[4], which from the memorandum's September 2026 date is the 2027 season ^[15][17]. The record supports scrutiny of the advisers themselves, not the stronger assumption that individual recommendations get contested on competition grounds, since the Division has said the recommendation itself is not the concern ^[3].

The letter bound nobody but ISS, and only as of 1987. What matters now is a different, later document: the Division and the FTC filed a statement of interest in May 2025 in the case brought by Texas and other states against three large asset managers, arguing that the safe harbor for passive investment and beneficial corporate governance does not protect the type of proxy voting the states alleged, which was voting used to press companies to reduce coal output ^[14][13]. The Division expressly referenced that distinction when it announced the ISS withdrawal ^[14]. A line between protected governance voting and unprotected coordination is the thing a general counsel can actually be examined on.

For this quarter the practical change is small. Engagement with ISS proceeds under the same mechanics, and the political record has been accumulating since the House Judiciary Committee wrote to ISS and Glass Lewis in August 2023 and 23 state attorneys general sent their own letter in November 2023 ^[11][12]. The decision that lands later is what happens if an adviser splits consulting from recommendations to cure the mismatch the Division named: issuers lose the channel they use to ask what a downgrade would take to reverse, and they lose it in the season the Division has said it will be watching ^[8][4].</body_markdown> </invoke>