Alabama and 10 other states sued three major asset managers on Wednesday in federal court for "conspiring to artificially constrict the market for coal."
According to the lawsuit, BlackRock, Vanguard and State Street each "used its power to affect a substantial reduction in competition in coal markets."
"For the past four years, America's coal producers have been responding not to the price signals of the free market, but to the commands of Larry Fink, BlackRock's Chairman and CEO, and his fellow asset managers. As demand for the electricity Americans need to heat their homes and power their businesses has gone up, the supply of the coal used to generate that electricity has been artificially depressed—and the price has skyrocketed. Defendants have reaped the rewards of higher returns, higher fees, and higher profits, while American consumers have paid the price in higher utility bills and higher costs," Alabama Attorney General Steve Marshall and 10 state attorneys general said in a lawsuit filed on Wednesday in the Eastern District of Texas.
The asset managers violated multiple federal laws that prevent a major shareholder, or a group of shareholders, from using their shares to lessen competition or engage in other anti-competitive schemes, according to the lawsuit.
"Texas will not tolerate the illegal weaponization of the financial industry in service of a destructive, politicized 'environmental' agenda. BlackRock, Vanguard, and State Street formed a cartel to rig the coal market, artificially reduce the energy supply, and raise prices," Texas Attorney General Ken Paxton said in a statement on Wednesday. "Their conspiracy has harmed American energy production and hurt consumers. This is a stunning violation of State and federal law."
A spokesperson for BlackRock told 1819 News in a statement on Wednesday, “BlackRock is deeply invested in Texas' success. On behalf of our clients, we have billions invested in Texas energy, partnering with the state to attract investments into the Texas power grid and helping millions of Texans retire with dignity.”
“BlackRock's holdings in energy companies are regularly reviewed by federal and state regulators. We make these investments on behalf of our clients, and our focus is on delivering them financial returns,” the BlackRock spokesperson said. “The suggestion that BlackRock has invested money in companies with the goal of harming those companies is baseless and defies common sense. This lawsuit undermines Texas' pro-business reputation and discourages investments in the companies consumers rely on.”
Marshall said in a statement on Wednesday, “Americans think that when they entrust their hard-earned savings to Wall Street firms, those firms will seek profits, not radical environmental goals.”
“But time and again, companies like BlackRock, State Street, and Vanguard invest as activists, not dispassionate fiduciaries,” Marshall said. “In this case, they found a way to line their own pockets while crippling the coal industry and raising energy prices for millions. This is greed masquerading as ‘environmental justice,’ and is precisely why we have antitrust laws.”
States v BlackRock Complaint Filed by Caleb Taylor on Scribd
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