11 State Attorneys General Challenge BlackRock, Vanguard, and State…
A recent lawsuit filed in the United States District Court for the Eastern District of Texas has caught the attention of many as it takes on financial giants BlackRock, Vanguard, and State Street for allegedly manipulating the U.S. coal market.
Led by Texas Attorney General Ken Paxton and supported by 10 other state attorneys general, the lawsuit claims that these firms have been using their significant ownership stakes in major coal producers to stifle competition and drive up energy prices.
The states involved as plaintiffs in this legal action are Texas, Alabama, Arkansas, Indiana, Iowa, Kansas, Missouri, Montana, Nebraska, West Virginia, and Wyoming.
The 108-page complaint outlines how BlackRock, Vanguard, and State Street collectively hold controlling interests in several coal companies, including Peabody Energy and Arch Resources, which are key players in U.S. coal production.
The lawsuit asserts that these financial firms formed an “output-reduction syndicate,” leveraging their shareholder power to compel coal companies to reduce production in the name of environmental goals, like the Net Zero Asset Managers Initiative.
Despite growing electricity demand, these actions have allegedly limited coal supply, leading to higher coal prices and increased expenses for consumers, particularly during a time of economic uncertainty.
This legal move by Attorney General Ken Paxton accuses BlackRock, State Street Corporation, and Vanguard Group of engaging in anticompetitive practices to artificially restrict the coal market.
By accumulating significant stakes in major publicly traded U.S. coal producers, these financial entities allegedly gained enough influence to dictate company policies. This culminated in their 2021 commitment to use their shares to pressure coal companies into aligning with green energy objectives by halving coal production by 2030.
Using initiatives like Climate Action 100 and the Net Zero Asset Managers Initiative, BlackRock, Vanguard, and State Street have been accused of signaling their intent to reduce thermal coal output, driving up electricity costs for Americans nationwide.
Furthermore, the lawsuit claims that these firms misled investors who opted for non-ESG funds under the false pretense of generating higher profits, while actually implementing ESG strategies that inflated electricity costs.
The deliberate manipulation of supply allegedly caused prices to surge, allowing these investment companies to make substantial profits at the expense of American consumers. This allegedly violates federal laws prohibiting major shareholders from engaging in anticompetitive practices and manipulating markets.
In response to these claims, a coalition of 10 other states has joined Texas Attorney General Ken Paxton in this lawsuit. The legal representation is being handled by the Buzbee Law Firm and Cooper & Kirk.
