11 States Sue Three Largest Institutional Investors for Anticompetitive Trade Practices

Eleven states, led by Texas, have sued three of the world’s largest institutional investors on charges of conspiring to buy shares of coal companies to control the market, reduce competition and violate federal and state antitrust laws.

The lawsuit was filed in the U.S. District Court for the Eastern District of Texas in Tyler and seeks a jury trial. He names as defendants BlackRock, Inc., State Street Corporation and Vanguard Group, Inc., which together manage more than $26 trillion in assets.

The companies were sued for “acquiring significant stakes in all major publicly traded coal producers in the United States” in order to gain “the power to control the policies of coal companies,” Texas Attorney General Ken Paxton said.

According to 109 page briefThe defendants own 30.43% Peabody Energy, 34.19% Arch Resources, 10.85% NACCO Industries, 28.97% CONSOL Energy, 29.7% Alpha Metallurgical Resources, 24.94% Vistra Energy, 8.3% Hallador Energy, 31.62% Warrior Met with Coal and 32.87% stake in Black Hills Corporation.

Under the Biden administration over the past four years, “U.S. coal producers have responded not to free market price signals but to the commands of Larry Fink, chairman and CEO of BlackRock, and his fellow asset managers,” the brief said. states. “As demand for the electricity Americans need to heat their homes and businesses has increased, the supply of coal used to produce that electricity has been artificially reduced and the price has skyrocketed. Defendants reaped the rewards in the form of higher revenues, higher fees and higher profits, while American consumers paid higher utility bills and higher costs.”

Consumer spending rose because companies weaponized their shares to promote so-called green energy agendas, including cutting coal production by more than half by 2030, the lawsuit claims. In response, publicly traded coal producers cut production and energy prices skyrocketed.

The companies promoted their policies primarily through two programs: Climate Action 100 and the Net Zero Asset Managers Initiative, signaling “their mutual commitment to reduce thermal coal production, which has predictably increased the cost of electricity for Americans” across the country, Paxton said.

The firms also allegedly defrauded thousands of investors “who chose to invest in non-ESG funds to maximize their returns,” Paxton said. “Nevertheless, these funds pursued ESG strategies despite defendants’ statements to the contrary.” While they allegedly directly limited competition among the companies whose shares they acquired, “their war on competition has industry-wide consequences,” it said.

“Texas will not tolerate the illegal weaponization of the financial industry for a destructive, politicized environmental agenda. BlackRock, Vanguard and State Street formed a cartel to manipulate the coal market, artificially reduce energy supplies and raise prices,” Paxton said. “Their conspiracy has harmed American energy production and consumers. This is a stunning violation of state and federal law.”

The lawsuit alleges that the companies’ actions violated the Clayton Act, which prohibits any stock acquisition if “the effect of such acquisition would be likely to substantially lessen competition”; and the Sherman Antitrust Act of 1890, 15 USC § 1, for conspiracy in restraint of trade.

It also alleges that the companies violated antitrust laws in Texas, Montana and West Virginia; Blackrock also allegedly violated the Texas Business and Commerce Code by engaging in “false, misleading or deceptive conduct.”

It asks the court to rule that the companies violated federal and state laws, grant injunctive relief and equitable relief, and enjoin them from doing so. It seeks civil penalties, including requiring Blackrock to pay $10,000 for the violation.

Paxton is joined in the lawsuit by the attorneys general of Alabama, Arkansas, Indiana, Iowa, Kansas, Missouri, Montana, Nebraska, West Virginia and Wyoming.

Buzbee Law Firm and Cooper & Kirk are serving as outside legal counsel.

The companies have not yet issued a statement on the lawsuit.

Lawsuit follows one field 25 states, led by Texas, have opposed the Biden administration, asking the court to stop federal ESG policies that could negatively impact the retirement savings of 152 million Americans.

This also happened after Texas listed Hundreds of companies and publicly traded investment funds, including Blackrock, are on the sale list for promoting ESG policies and the fight against oil and natural gas.