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A lawsuit brought by Texas Attorney General Ken Paxton against asset managers BlackRock, State Street and Vanguard alleging they colluded to manipulate the coal market could hurt U.S. coal firms if the firms are forced to divest, according to one of the firms.
Paxton’s suit, which was filed in Nov. 2024 and joined by 10 other states, claims that the three asset managers formed a cartel to rig the coal market, constrain energy supplies and raise prices. The suit alleges the asset managers violated federal and state antitrust laws, along with consumer protection laws in Texas, by using their stock holdings to influence coal firms to reduce their output in line with the goals of climate initiatives they have joined.
President Donald Trump’s former energy secretary, Rick Perry, in an op-ed in the Washngton Times, called the lawsuit “misguided” and says that it threatens to undermine Trump’s energy agenda.
“If successful, this lawsuit could force an estimated $18 billion in coal-related holdings off the books of these major asset managers,” Perry wrote. “That’s not just numbers on a spreadsheet; it’s a direct threat to coal companies’ ability to raise capital, finance infrastructure and support jobs.”
He continued, “This is a time to encourage more energy production, not less. A time to attract investment, not drive it away. And a time to build infrastructure, not bury it in litigation.”
Perry also said that coal production is down in the United States due to market forces, and not due to any collusion by investment companies.
“That’s what competition looks like. The U.S. energy mix has evolved because consumers and businesses have demanded affordable, reliable power,” he wrote.
The three asset managers have disputed the lawsuit’s claims, arguing that there was no collusion and the firms have sought to represent their clients’ best financial interests. BlackRock has also taken issue with the states seeking divestment by the firms as a possible remedy for the case, which it argues would undercut the Trump administration’s goal of energy independence.
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The lawsuit claims asset managers colluded to reduce coal output. (Justin Merriman/Bloomberg via Getty Images / Getty Images)
Following the court’s ruling that dismissed some of the consumer protection claims while allowing others to proceed, BlackRock said that forced divestment would undercut access to capital for coal firms and in turn undermine the Trump administration’s energy agenda.
“By pursuing forced divestment, the Attorneys General are undermining the Trump administration’s goal of American energy independence. Forcing divestment will harm coal companies’ ability to access capital and invest in their businesses and jobs, likely leading to higher energy prices for Americans,” BlackRock said.
Former Texas Governor Rick Perry, who also served as energy secretary during Trump’s first term, said the lawsuit could hurt the U.S. coal industry. (Matthew Eisman/Getty Images / Getty Images)
TRUMP ADVISOR NAVARRO SAYS INDIA MUST STOP BUYING RUSSIAN OIL
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| BLK | BLACKROCK INC. | 1,131.88 | -8.12 | -0.71% |
| STT | STATE STREET CORP. | 114.85 | -0.95 | -0.82% |
Phil Flynn, senior account executive and market analyst at the Price Futures Group and FOX Business Network contributor, said in an interview that the case comes in the wake of “a lot of political pressure” on financial institutions to promote green energy amid restrictive regulations on coal in the U.S. and Europe, as that experience has changed the firms’ perspectives.
“I think that the companies that started to push the ESG had a change of heart because they realized they were doing their investors a disservice,” Flynn said. “When they started to pull their money out of coal and natural gas and oil, the returns weren’t there when they were forced to invest in noncompetitive energy sources and reduce their carbon footprint.”
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Texas Attorney General Ken Paxton’s suit claims the asset managers violated antitrust law. (STEFANI REYNOLDS/AFP via Getty Images / Getty Images)
Flynn said of the asset managers that, “I can see their argument: they’re saying ‘hey, if we pull our money nobody’s going to invest, it’s going to fall apart, we’re the only game in town.'”
“But if there’s a viable business plan and profits to be made, and the regulatory stigma that was put into place on coal in a global market goes away, there might be more people that invest,” Flynn said. “I think both sides have a point, but it’s going to be hard to prove that they’re the only game in town, that they’re the only investors that would invest in that space.”
Earlier this month, U.S. District Court Judge Jeremy Kernodle dismissed three of the 21 counts against the asset managers, allowing the case to proceed.
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