Paxton Nails Vanguard in Coal Cartel Probe

AUSTIN, TX – Texas Attorney General Ken Paxton has landed a blow against the financial elite, securing a historic settlement with The Vanguard Group, Inc. (“Vanguard”) in a case alleging coordinated market manipulation aimed at crippling the coal industry. The $29.5 million agreement, announced today, represents the first major victory in Paxton’s multi-state lawsuit targeting asset management giants BlackRock, State Street, and Vanguard, accusing them of artificially inflating coal prices under the guise of “green energy” initiatives.

The core of the accusation: a BlackRock-led “cartel” allegedly prioritized profits over consumer costs, driving up electricity prices nationwide while simultaneously deceiving investors who opted for non-ESG funds. Paxton’s office alleges this scheme produced “massive profits” for the conspirators at the expense of average Americans. The Trump Administration’s Department of Justice (“DOJ”) and Federal Trade Commission (“FTC”) threw their weight behind Paxton’s lawsuit with a joint statement of interest, signaling the gravity of the allegations.

“I am glad to see that Vanguard has chosen to protect investors and become the industry leader when it comes to empowering investors with proxy voting choice,” Paxton stated. “This sets a new standard for institutional investors that every company should follow.” However, the AG didn’t pull punches, adding, “While Vanguard has taken appropriate action to resolve this case, Blackrock and State Street have continued to ignore state laws, engage in anticompetitive schemes that hurt American energy, and undermine those who use their services to invest.” Paxton vowed to continue his fight against what he termed a “woke agenda” threatening American energy independence.

The settlement itself forces Vanguard to fundamentally alter its investment practices. The agreement explicitly prohibits Vanguard from using its shareholdings to dictate portfolio company strategies, threaten withdrawal of investments based on ESG compliance, or push for specific directors or shareholder proposals. This “passivity commitment,” according to Paxton’s office, is unprecedented in the industry and aims to ensure a competitive and affordable coal market. Vanguard has agreed to pay $29.5 million to the states involved in the lawsuit.

In a move hailed as a win for investor control, Vanguard will, for the first time, offer proxy voting to investors in funds representing at least 50% of its U.S. equity fund assets. This allows customers to directly influence the business decisions of portfolio companies, including prioritizing profitability over Environmental, Social, and Governance (ESG) goals. Paxton’s office believes this will empower investors and prevent further manipulation of the market.

The fight isn’t over. Paxton remains laser-focused on BlackRock and State Street, accusing them of continued defiance of state laws and anti-competitive behavior. This case underscores Paxton’s aggressive stance against what he views as politically motivated financial maneuvering, positioning him as a staunch defender of the coal industry and affordable energy for American consumers. Click here to read the full settlement agreement.