Exxon Mobil to face trial in New York investor fraud lawsuit
NEW YORK: Exxon Mobil Corp on Tuesday will face trial in a lawsuit by New York’s attorney general accusing it of misleading investors about the risks of climate change regulations to its business.
The trial, expected to begin before Justice Barry Ostrager in Manhattan Supreme Court and last up to three weeks, could feature testimony from Rex Tillerson, who was Exxon’s chief executive before serving as US Secretary of State.
It is the first of several lawsuits currently pending against major oil companies related to climate change to go to trial.
“The New York Attorney General’s allegations are false,” Exxon said in a statement. “We tell investors through regular disclosures how the company accounts for risks associated with climate change. We are confident in the facts and look forward to seeing our company exonerated in court.”
The attorney general sued Exxon in October 2018 under the Martin Act, a New York state law that had been used primarily to go after financial fraud.
The lawsuit claimed Exxon falsely told investors it had properly evaluated the impact of future climate regulations on its business using a “proxy cost” for the likely effects of future events on its business.
However, these proxy frequently were not used figures in its internal planning or cost assumptions, according to the lawsuit.
The attorney general also accused the company of failing to account properly for the costs of potential regulation in determining the value of its oil and gas reserves, or whether to write down the value of its assets.
Massachusetts is separately investigating whether Exxon concealed its knowledge of the role fossil fuels play in climate change.
Both Massachusetts and New York began investigating Exxon after news reports in 2015 saying its own scientists had determined that fossil fuel combustion must be reduced to mitigate the impact of climate change.
Those reports, by Insideclimate News and the Los Angeles Times, were based on documents from the 1970s and 1980s. Exxon said the documents were not inconsistent with its public positions.
Exxon and other oil companies including BP Plc, Chevron Corp and Royal Dutch Shell face lawsuits by cities and counties across the United States seeking funds to pay for seawalls and other infrastructure to guard against rising sea levels brought on by climate change.
THE LAWSUIT CLAIMED EXXON FALSELY TOLD INVESTORS IT HAD PROPERLY EVALUATED THE IMPACT OF FUTURE CLIMATE REGULATIONS ON ITS BUSINESS USING A “PROXY COST” FOR THE LIKELY EFFECTS OF FUTURE EVENTS ON ITS BUSINESS.