New York Attorney General Andrew Cuomo is investigating five major energy companies to determine if plans to create coal-fired power plants present an undisclosed financial risk to investors.
Cuomo used the Martin Act — the same state securities law that Gov. Eliot Spitzer used to investigate corruption on Wall Street — when he sent subpoenas seeking internal documents to AES Corp., Dominion Resources Inc., Dynegy Inc., Peabody Energy Corp. and Xcel Energy Inc.
In letters accompanying the subpoenas, the attorney general's office suggested that the companies could take a financial hit if federal lawmakers tighten controls on coal-fired plants, which emit carbon dioxide, among the pollutants scientists have linked to global warming.
The letters questioned whether investors in the energy companies had been adequately informed about the potential risk of developing plants that might hurt the environment.
"Selective disclosure of favorable information or omission of unfavorable information concerning climate change is misleading," the letters said.
The investigation could be viewed by some as an unusual attempt to use securities law to advance an environmental agenda. A coalition of environmental groups and shareholder activists oppose the effort to create more than 100 coal-fired power plants currently under consideration.
Jeffrey Lerner, a Cuomo spokesman, said the attorney general has been an advocate of environmental issues for "quite a long time," but Lerner called the probe a "straightforward use of the Martin Act" because it involved disclosure of financial information.
"The attorney general feels it's important for investors to have as much information as possible, and these subpoenas seek to find out how much information is being disclosed to investors in regards to CO2 emissions and their impact on investors," Lerner said.
Power plants produce about 30 percent of U.S. carbon emissions, according to the letters.
Minneapolis-based Xcel Energy released a statement saying its coal-fired plant in Colorado is being built under an agreement with national, state and local environmental groups, including the Sierra Club and Environmental Defense.
"Our financial disclosures are adequate," the statement said. "We look forward to discussing this matter further with the New York attorney general."
Spokesmen with Dominion, based in Richmond, Va., AES, based in Arlington Va., and Dynegy, based in Houston, declined to comment until the companies could review the subpoenas and the letters.
Messages left Sunday for officials from Peabody, based in St. Louis, were not immediately returned.
Put on the books in 1921 to curb fraudulent investment advice, the Martin Act lets New York's attorney general get convictions without proving criminal intent and gives him broad powers to subpoena documents and question witnesses.