11 states are suing three largest institutional investors for anticompetitive trade practices

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

The lawsuit was filed in the United States District Court for the Eastern District of Texas, Tyler Division, and requires a jury trial. It names as defendants BlackRock, Inc., State Street Corporation and Vanguard Group, Inc., which collectively manage more than $26 trillion in assets.

The companies were sued for “acquiring significant ownership interests in every significant public coal producer 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 synopsisthe 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 coal and 32.87% Firma Czarne Wzgórza.

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

Consumer costs have risen as companies have “armed” their stock to push a so-called green energy agenda that includes cutting coal production by more than half by 2030, the lawsuit alleges. In response, publicly traded coal producers cut production and energy prices skyrocketed.

The companies advanced their policies primarily through two programs: Climate Action 100 and the Net Zero Asset Managers Initiative, signaling a “shared intention to reduce thermal coal mining, which has predictably increased electricity costs for Americans” across the country, Paxton said.

The companies also allegedly defrauded thousands of investors “who chose to invest in non-ESG funds to maximize their returns,” Paxton said. “However, these funds pursued ESG strategies despite defendants’ statements to the contrary.” Although they allegedly directly limited competition between the companies whose shares they purchased, “their war on competition has consequences for the entire industry,” the document reads.

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

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

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

It asks the court to find that the companies have violated federal and state statutes, grant injunctive and equitable relief, and prohibit them from engaging in such conduct. It is seeking civil penalties, including requiring Blackrock to pay $10,000 for each violation.

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

Buzbee and Cooper & Kirk act as external legal advisors.

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

Lawsuit occurs after one notification by 25 states, led by Texas, against the Biden administration, asking the court to end federal ESG policies that could negatively impact the retirement savings of 152 million Americans.

It also appears around Texas listed hundreds of listed companies and investment funds, including Blackrock, on its divestment list for supporting ESG and anti-oil and gas policies.