Texas Judge Approves Multi-State Legal Action Alleging BlackRock, Vanguard, and State Street Use Climate Policies to Influence Energy Market Manipulation
In a significant development, a federal district court judge has denied the motion to dismiss a multistate lawsuit led by Texas Attorney General Ken Paxton against BlackRock, Vanguard, and State Street. The lawsuit, which was filed in November 2024, alleges that the asset managers conspired to manipulate coal markets through coordinated pressure on coal companies to reduce coal output [1][2][3].
The lawsuit, which was initially joined by a coalition of thirteen states, accuses the asset managers of violating antitrust laws and conspiring to manipulate coal markets. The states' claims include dozens of specific examples of the asset managers' conduct supporting their theory [1][3].
The court found that the states sufficiently alleged plausible violations of federal antitrust laws, including the Clayton Act and Sherman Act, as well as state consumer protection laws from Texas, Montana, Iowa, and Nebraska. Some consumer protection claims from Louisiana and Nebraska were dismissed [2][3].
Evidence supporting the suit’s plausibility includes public parallel commitments to climate initiatives, such as Climate Action 100+ and the Net Zero Asset Managers initiative, engagement with coal company management, and aligned proxy voting, suggesting coordinated conduct among the asset managers. However, the court clarified that it is not ruling these initiatives were the site of an illegal conspiracy but considered their existence in evaluating the plausibility of claims [4].
The Trump Administration, as of May 2025, and state Attorneys General support the continuation of the lawsuit, emphasizing concerns about an "investment cartel" influencing energy markets to the detriment of consumers and national energy independence [1]. The Federal Trade Commission (FTC) and Department of Justice (DOJ) have issued a Statement of Interest clarifying that certain engagements by institutional investors on corporate governance matters may still qualify as “passive investment” under antitrust laws, a point relevant to BlackRock, Vanguard, and State Street’s defenses claiming they are passive investors rather than active conspirators [5].
The asset managers, however, deny wrongdoing, asserting their actions are lawful shareholder engagement consistent with passive investment status. BlackRock, for instance, stated that the lawsuit is not supported by the facts and they will demonstrate this in court. State Street asserted that there is no collusion in the case and they remain confident that the facts and legal substance are on their side [2].
In response to the lawsuit, the asset managers have exited or significantly reduced their participation in the climate initiatives named in the suit [1]. The lawsuit is currently moving forward toward discovery and potentially trial.
As of early August 2025, the case is actively moving forward, with the court allowing substantive antitrust and consumer protection claims to be pursued [1][2][3][4][5]. The defendants remain determined to fight the allegations against them, while the states continue to push for accountability in the energy market.
References: [1] Texas Tribune. (2025, August 5). Texas-led lawsuit against BlackRock, Vanguard, and State Street moves forward. Retrieved from https://www.texastribune.org/2025/08/05/texas-led-lawsuit-blackrock-vanguard-state-street/
[2] Reuters. (2025, July 28). U.S. judge denies BlackRock, State Street and Vanguard bid to dismiss Texas lawsuit. Retrieved from https://www.reuters.com/business/us-judge-denies-blackrock-state-street-and-vanguard-bid-dismiss-texas-lawsuit-2025-07-28/
[3] CNN Business. (2025, July 28). Federal judge denies motion to dismiss Texas lawsuit against BlackRock, State Street, and Vanguard. Retrieved from https://www.cnn.com/2025/07/28/investing/blackrock-state-street-vanguard-texas-lawsuit-denied/index.html
[4] Wall Street Journal. (2025, July 28). Federal Judge Allows Texas Lawsuit Against BlackRock, State Street, and Vanguard to Proceed. Retrieved from https://www.wsj.com/articles/federal-judge-allows-texas-lawsuit-against-blackrock-state-street-and-vanguard-to-proceed-11627228801
[5] Bloomberg. (2025, June 21). FTC, DOJ Say Institutional Investors Can Still Be Passive Under Antitrust Laws. Retrieved from https://www.bloomberg.com/news/articles/2025-06-21/ftc-doj-say-institutional-investors-can-still-be-passive-under-antitrust-laws
- The multistate lawsuit, led by Texas Attorney General Ken Paxton, accusing BlackRock, Vanguard, and State Street of conspiring to manipulate coal markets through coordinated pressure on coal companies is moving forward, as a federal district court judge has denied the defendants' motion to dismiss the case.
- The states' allegations include violations of federal antitrust laws, such as the Clayton Act and Sherman Act, as well as state consumer protection laws from Texas, Montana, Iowa, Nebraska, Louisiana, and others.
- The asset managers, like BlackRock and State Street, have publicly committed to climate initiatives, such as Climate Action 100+ and the Net Zero Asset Managers initiative, but these commitments have been considered in evaluating the plausibility of the states' claims, although not ruled as the site of an illegal conspiracy.
- The court's decision allows substantive antitrust and consumer protection claims to be pursued, prompting the defendants to maintain their innocence and assert that their actions are lawful shareholder engagement consistent with passive investment status.
- The case is a significant development in the intersection of policy-and-legislation, politics, finance, environmental-science, climate-change, and general-news, as it raises questions about the role of sustainable investment in the energy market and the boundaries of antitrust laws regarding institutional investors' engagement in corporate governance matters.
