The Trump administration has ripped into a Texas-led legal battle with political allegations to dilute the impact of U.S. financial giants on U.S. companies.
Last week, the U.S. Department of Justice and the Federal Trade Commission jointly held a “Statement of Interest” with Texas Attorney General Ken Paxton and 10 other Republican-led states, including one antitrust case against trillion-dollar asset manager BLK and its rivals State Street (STT) and vanguard.
Allegations: Using its massive stock holdings, Blackstone and its rival Financial Corporation coordinated a "left-wing ideological" attack on U.S. coal companies, imposing coal production on coal producers Arch Coal, Black Hills and Peabody that forced coal production to the southern powder river basin and hot coal markets. They say the decline in output hurts U.S. consumers by artificially expanding energy prices.
"Reducing carbon reduction is no longer a defense of what is called behavior here, rather than a price determination between airlines, reducing the amount of carbon-launched cargo," the DOJ and the FTC said in a statement supporting the state's claims.
States claim that financial companies agree to reduce output through a net asset manager initiative and climate action of 100+ for carbon net asset managers.
They also said the defendants’ disclosure and public statements indicated that they were engaged directly to coal company executives to affect production levels and that they used the right to vote when engagement failed to achieve those goals.
The complaint says that as a major shareholder of large but minority shareholders, the defendant's influence exceeds his official equity share.
Challengers claim that these actions go beyond shareholder advocacy and passive investment by promoting their own “green energy” or net zero goals rather than the goals of coal companies.
The agency worked hard to consider the government's views in the case, which, although not the party to the dispute, has attracted criticism from the defendants and others.
On Wednesday, nonpartisan nonprofit regulators Organization Accountability (CFA) accused managing monetary managers of targeting political rather than law enforcement reasons. The group has proposed a Freedom of Information Act requirement that these agencies disclose communications on their decision weights. The CFA was co-founded in 2015 by Anne Weismann, a former attorney for the Citizens’ Ex-Liability and Ethics Code of Civilians, the Washington Oversight Group.
"This case is related to antitrust laws, but rather about conservative oppositions who recognize climate change risks," said Michelle Kuppersmith, executive director of the CFA. "Americans should know who is affecting the FTC uses antitrust authority to attack political opponents."
Meanwhile, Derek Mountford, the Gunners’ antitrust partner, said the lawsuit’s remarks also marked political motivation. However, he added, it could ultimately answer an uneasy antitrust question about how competition law applies to the actions of asset managers who have significant ownership in competitive companies. For example, should asset managers and index fund providers be treated differently from individuals and businesses that offer multiple companies in a single market by law and by individuals and businesses that provide products and services?
"If a person has a significant interest in three competitive companies, then the alarm bell starts to surface and there may be some anti-competitive behavior," Mountford said.
He said that while the BlackRock scenario is not as cut and dry as compared to companies and suppliers that can more directly affect market competition, there has been concerns about the role institutional shareholders can play.
"This case will represent a clear answer to this question," Mountford said.
BlackRock asked the judge to dismiss the case and accused the government of trying to "rewrite" antitrust law under a "absurd" theory that plotted to reduce production output. “Forcing asset managers to evacuate from coal companies will damage their ability to obtain capital and invest in their businesses and employees, which could lead to higher energy prices,” the company said in a statement.
BlackRock CEO Larry Fink has had a series of disconnects with the company’s environmental, social and governance (ESG) plans as bipartisan concerns spread over the power of financial giants to sway the U.S. market. Fink publicly stated in June 2023 that he would stop using the politically sensitive acronym "ESG" because it has been "weaponized" by the ideological right and left.
In January, before President Trump took office, the financial giant cut ties with the unsupported Net Zero Asset Manager Initiative (NZAM), an environmental advocacy group that promised to vow zero carbon emissions by 2050.
About six months after the government's legal application, a report was released on the Republican-controlled House Judiciary Committee accusing the three monetary managers of using their financial influence to force U.S. coal companies to "decarbonize" and get net zero.
According to the report, monetary managers force coal companies to pass negotiations, shareholder agency resolutions, and disclosure and reduction of carbon emissions in "stubborn companies."
Democrats also criticized the huge impact of financial companies on the U.S. market, but for different reasons. Senator Bernie Sanders (D-Vt.) is a voice critic of the influence on the large people, describing the group's stock ownership in 95% of the S&P 500 (^GSPC) companies is "oligarch-made." Sanders and Senator Elizabeth Warren (D-Mass).
Mountford of Gonst said the federal government’s decision to weigh state agricultural cases is unusual, but increasingly common.
“This is not something the courts have to fight with, and in this type of case, the Justice Department is weighing the Justice Department,” he said. “This is a very new phenomenon, which was pioneered by Trump… continue during the Biden administration.”
“I think,” he added, “we’re going to stay here.”
Alexis Keenan is a legal journalist at Yahoo Finance. Follow Alexis on X @AlexiskWeed.