Institutional Shareholder Services has sued the U.S. Securities and Exchange Commission over guidance that would heighten regulatory oversight of proxy advisers, claiming it would have a chilling effect on their ability to advise shareholders.

In August, the SEC recommended that the definition of “proxy solicitation” be expanded to include expert proxy voting advice rendered at the request of investors.

The new interpretation would make proxy advisers subject to anti-fraud provisions that prohibit investment advisers from making false or misleading statements or omissions in solicitations. To ensure compliance, the SEC said proxy firms should consider more extensive disclosures.

ISS, the nation’s largest proxy adviser, responded with a lawsuit Thursday in which it is seeking a court order finding the guidance invalid and setting it aside.

“We are deeply concerned that it will be used or interpreted in a way that could impede our ability to deliver our data, research, and analyses in an independent and timely manner,” ISS CEO Gary Retelny said in a news release.

“We believe litigation to be necessary to prevent the chill of proxy advisers’ protected speech and to ensure the timeliness and independence of the advice that shareholders rely on to make decisions with regards to the governance of their publicly traded portfolio companies,” he added.

In adopting the guidance, SEC Commissioner Elad Roisman said public companies, investor groups, and individual investors had expressed concerns “relating to the influence that proxy advisory firms appear to have over proxy voting decisions in our markets.”

The guidance “addresses some of the grievances U.S. corporations have long had about proxy advisers, such as mistakes in reports the advisers issue on specific companies and conflicts of interest in their business models,” CNBC noted.

But ISS said it was unlawful because, among other things, “whereas a proxy adviser offers independent advice and research to its clients about how to vote their shares based on the proxy voting policy guidelines selected by the client, a person who ‘solicits’ proxies urges shareholders to vote a certain way in order to achieve a specific outcome in a shareholder vote.”

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