NY Sues Exxon For Allegedly Defrauding Shareholders On Climate Change Risks
New York’s attorney general filed a lawsuit Tuesday against ExxonMobil for allegedly downplaying for decades the risk the company’s oil products pose on the climate, The New York Times reported Wednesday.
The lawsuit follows more than three years of investigation first orchestrated by former AG Eric Schneiderman, who resigned in April over abuse allegations from former romantic partners. The probe took many different twists and turns and seemed to come to a halt shortly after his resignation.
Exxon engaged in a “longstanding fraudulent scheme” to deceive investors, analysts and underwriters “concerning the company’s management of the risks posed to its business by climate change regulation,” the lawsuit notes. (RELATED: SEC Investigators Decide Not To Punish Exxon For Alleged Climate Heresy)
The Texas-based oil producer argues that it can withstand stringent climate regulations, but the company actually “employed internal practices that were inconsistent with its representations, were undisclosed to investors, and exposed the company to greater risk from climate change regulation than investors were led to believe,” the complaint notes.
Exxon has painted the years-long probe as an attempt to restrict the company’s First Amendment rights while providing thousands of documents to investigators. The company and New York have haggled over the issue for years before the state officially pursued legal charges.
Barbara Underwood, the state’s current AG, brought the lawsuit under the Martin Act, a state law that gives her broad authority to prosecute securities fraud. The suit demands Exxon turn over any profits the company made through the alleged fraud and make restitution to investors. Exxon could be made to pay out hundreds of millions of dollar if the suit is successful.
Schneiderman’s probe stems from research conducted by Inside Climate News and The Los Angeles Times, which reported in 2015 that the company has consistently downplayed whatever role it has played in contributing to man-made global warming.
The Securities and Exchange Commission (SEC) engaged in a similar investigation into whether the company overvalued assets in the face of future climate regulations. The SEC eventually dropped the probe in August and noted in a letter that it would not recommend enforcement actions. The message included a disclaimer stating the probe could be reopened at a later dated.