The Trump administration has waded into a politically charged Texas-led legal fight to dilute US financial giants' alleged influence over corporate America.
Last week, the US Justice Department and the US Federal Trade Commission filed a joint “statement of interest” siding with Texas Attorney General Ken Paxton and 10 other Republican-led states in an antitrust case against trillion-dollar asset managers BlackRock (BLK) and its rivals State Street (STT) and Vanguard.
The charge: Using their substantial stock holdings, BlackRock and its rival financial firms coordinated a “left-wing ideological” attack on US coal companies, pressuring coal producers Arch Coal, Black Hills, and Peabody to cut coal production in the South Powder River Basin and thermal coal markets, the DOJ and FTC said in the court filing. The decreased output, they said, harmed US consumers by artificially inflating energy prices.
“Carbon reduction is no more a defense to the conduct alleged here than it would be to price fixing among airlines that reduced the number of carbon-emitting flights,” the DOJ and FTC said in the statement supporting the states' claims.
The states allege that the financial firms agreed to reduce output through commitments to carbon-reduction organizations Net Zero Asset Managers Initiative and Climate Action 100+.
They also say disclosures from the defendants and public statements show that they engaged directly with coal company executives in efforts to influence production levels, and they used their voting power when engagement fell short of meeting those goals.
As large yet minority shareholders, the complaint claims, the defendants have more influence than their formal equity share.
The actions extend beyond shareholder advocacy and passive investing by furthering their own “green energy” or net-zero goals, rather than the goals of the coal corporations, in violation of Section 1 of the Sherman Act and Section 7 of the Clayton Act, the challengers claim.
The agencies' effort to have the administration's perspective considered in the case, despite not being a party to the dispute, has drawn criticism from the defendants and others.
On Wednesday, Campaign for Accountability (CfA), a nonpartisan nonprofit watchdog organization, accused the administration of targeting the money managers for political rather than law enforcement reasons. The group filed a Freedom of Information Act Request asking the agencies to disclose communications underlying their decision to weigh in on the case. CfA was co-founded in 2015 by Anne Weismann, former head counsel for the watchdog group Citizens for Responsibility and Ethics in Washington.
