In the wake of a domestic glut in natural gas, claims against at least two U.S.-based global coal companies have been filed, alleging “stock-drop” violations under the Employee Retirement Income Security Act.

Suits against Arch Coal and Peabody Energy, both headquartered in St. Louis, Missouri, were filed in U.S. District Court for the Eastern District of Missouri recently, just days a part.

In the claim against Arch, Douglas Roe, a former employee, alleges that Arch’s Employee Thrift Plan ignored the grim realities facing the company and the coal industry as it more than doubled participants’ holdings in company stock between 2011 and 2013, from 1.9 million shares to 3.9 million.

Read: Failing 401(k) sponsors cling to their own stock

In February 2011, shares of Arch peaked at more than $36 a share. By July 2013 they had fallen to about $3.65 a share.

The claim against Arch alleges the plan suffered $53 million in losses as a result.

Days later, Lori Lynn, a Peabody employee, filed a similar claim alleging “tens of millions of dollars in losses” to retirement plans sponsored by Peabody that incorporated company stock.

Over the course of the class period named in the Peabody claim, from December 14, 2012 to June 10, 2015, the stock value dropped 88 percent, from $26.56 to $3.21.

That means the 2 million shares held in Peabody plans would be worth about $7 million at the time the claim was filed, compared to more than $53 million at the beginning of the class period.

Several Peabody plans incorporated company stock, including the United Mine Workers Association 401(k) plan and a 401(k) profit-sharing plan, according to court documents.

Both suits name plan trustees and members of the executive management teams as fiduciaries.

In a statement provided to Argus, a London-based publisher of commodity news, a Peabody representative said, “the claims have no merit,” and that they would be vigorously defended.

A recent note to investors published by Zacks, a ratings agency, said the U.S. coal industry is under “immense stress” from reduced demand, primarily driven by the availability of cheaper and cleaner natural gas and increasing stricter environmental standards.

Instant Insights /

Mining slowdown prompts stock-drop suits against coal companies

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