Exxon faces trial in New York for investor fraud
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Exxon faces trial in New York for investor fraud

The New York Attorney General’s suit against multinational oil and gas corporation Exxon Mobil started on Tuesday in Manhattan Supreme Court, a trial-level New York court. The Attorney General filed a complaint in October 2018 under General Business Law §352, Executive Law § 63(12) and for common law fraud.

The suit alleges that Exxon falsely calculated the risks posed by “increasingly stringent policies and regulations” in regard to climate change. Exxon continues to reassure investors that their oil reserves and other assets face little risk of becoming too costly to operate.

The company claims that they have been applying an escalating proxy cost of carbon dioxide and other greenhouse gasses to its business forecasts, but they did not apply the costs represented to investors in their calculations. Exxon consistently applied a lower proxy cost or no cost at all in their projections.

The complaint alleges that former CEO Rex Tillerson knew that these representations, made to assure investors that Exxon was managing the risk associated with climate change, were misleading. This misrepresentation allowed the company to avoid “large write-downs” and resulted in the proxy costs “being an illusory risk management tool with no actual economic impact on the company.”

The Attorney General seeks a compelled disclosure to investors and a disgorgement of all gains made as a result of the fraud.

Exxon has been on the offensive in the past few years, failing to block suits in New York and Massachusetts on similar fraud charges, appealing both decisions.