Did ExxonMobil Mislead On Climate Change? N.Y. Attorney General Investigates

New York’s Attorney General Eric Schneiderman is investigating allegations that ExxonMobil Corporation, the world’s largest energy company, suppressed evidence its own researchers compiled that linked fossil fuel emissions to climate change, thus misleading the public and shareholders for decades about the perils of climate change.

Schneiderman is utilizing a statute that gives New York state prosecutors broad authority to prosecute securities fraud: The Martin Act. This nearly century–old statute allows the Attorney General to regulate, investigate and take enforcement action against securities fraud, including seeking equitable and monetary remedies. N.Y. Gen Bus. Law §§ 352-c, 353 (McKinney 2012).

The Martin Act has been used over the years to prosecute hedge funds, investment advisers, large-scale Ponzi schemes, and major investment banks accused of misleading investors.

Scienter, reliance, and damages need not be demonstrated. Instead, the only elements required to establish a Martin Act violation are a misrepresentation or omission of material fact where engaged in to induce or promote the issuance, distribution, exchange, sale, negotiation or purchase of securities.

Schneiderman subpoenaed Exxon last week, demanding extensive financial records, emails and other documents to probe the company’s knowledge and disclosures about climate change going back to the 1970s.

Advocacy groups with expertise in financial analysis have been warning that fossil fuel company stock prices may be overvalued, as limiting climate change might require that much coal, oil and gas be left in the ground. In fact, today, coal giant Peabody Energy agreed to disclose climate change and climate-related regulatory risks in its securities filings in response to Schneiderman’s 2013 investigation of Peabody under the Martin Act.

Related reading:

 N.Y. Attorney General Investigates Whether Exxon Mobil Lied On Climate Change, npr.org, November 5, 2015.

Exxon Probe Will Explore Gray Areas of Climate Change, Law 360, November 6, 2015.

Exxon Mobil Investigated for Possible Climate Change Lies by New York Attorney General, N.Y. Times, November 5, 2015.

New York Investigating Whether Exxon Hid What it Knew About Climate Change, L.A. Times, November 5, 2015.


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