The referees are on trial — but who called the match?

The Securities and Exchange Commission has sued Institutional Shareholder Services, according to CNBC, seeking to enforce a subpoena as the Trump administration widens its scrutiny of proxy advisory firms. ISS and its peers occupy a peculiar and genuinely important position in the architecture of modern capital markets: they are the intermediaries through whom millions of dispersed shareholders — pension funds, endowments, insurance pools — translate ownership into governance. Strip them of independence or credibility, and you have not liberated the market; you have merely handed the governance of large corporations back to their own managers, with no one left to ask inconvenient questions.

I confess I am not equipped to adjudicate the precise legal merits of the subpoena, nor the specific conduct that drew the SEC's attention — the engineering of securities regulation in 2026 is well beyond my direct knowledge, and I will not pretend otherwise. But the macroeconomic and political-economy question underneath this case is one I recognise immediately: who controls the flow of information that shapes investment decisions, and in whose interest is that control exercised?

Animal spirits — the confidence, or its absence, that moves capital from idle balances into productive enterprise — are not generated in a vacuum. They depend on the quality of information available to those making decisions. Proxy advisers exist precisely because the individual shareholder, however large, cannot monitor every boardroom in which they hold a stake. If the state uses its enforcement power to intimidate or destabilise those advisers — on grounds of political displeasure rather than genuine market failure — it does not improve the quality of corporate governance; it degrades the information environment on which rational investment depends. The consequence, as inference rather than recollection, is likely to be more entrenched managerial power, less accountability to owners, and a subtle but real drag on the productive allocation of capital.

The rational case for scrutinising proxy advisers is not nothing. Concentrated influence in the hands of two or three firms — ISS and Glass Lewis dominate the field — does create its own concentration risk. If their recommendations are systematically mistaken, or if they import non-financial considerations that shareholders have not sanctioned, a legitimate governance argument can be made. I do not dismiss that case. But there is a considerable distance between reforming a concentrated intermediary market and deploying the SEC's subpoena power in a manner that, as CNBC reports, forms part of a broader administration campaign against these institutions. The former is market design; the latter risks being market intimidation.

The lesson I drew from Bretton Woods — and from the decades of monetary disorder that preceded it — is that the architecture of finance is not self-organising. It is a public design, and it must be designed with the public interest in mind. Corporate governance is a quieter version of the same principle: the rules by which capital is allocated and managers are held accountable are not natural facts but institutional choices. When those institutions are weakened for reasons of political convenience, the losses are diffuse and slow — they show up in misallocated investment, in entrenched underperformance, in the long-run failure of firms that no one was left to scrutinise. Those losses are real even when no single actor can be made to account for them. That is the argument the SEC, and the administration directing it, should be required to answer.