ExxonMobil Cleared In NY Securities Fraud Climate Change Case

A Manhattan judge Tuesday ruled ExxonMobil did not mislead investors over its climate change forecasts but stopped short of absolving the company from responsibility “for contributing to climate change through the emission of greenhouse gases in production of fossil fuel products.”

New York Supreme Court Judge Barry Ostranger ruled the state attorney general’s office had failed to prove its case following a three-week trial that resulted from a more than three-year investigation.

In his 55-page opinion, Ostranger noted a similar investigation in California has stalled and a Securities and Exchange Commission inquiry has been dropped. A similar case in Massachusetts was filed in October, alleging violations of consumer and investor protection laws. Shareholder lawsuits also are pending in Texas and New Jersey.

The attorney general’s office, which estimated damages could reach $1.6 billion, alleged in its complaint that ExxonMobil “knew that its representations [on climate change] were not supported by the facts and were contrary to its internal business practices.” It also alleged the company “made various material written and oral representations and omissions that tended to mislead the public.”

The attorney general argued ExxonMobil used two accounting methods to assess the impact of climate change – one internal and the other public. The office argued how the company planned for the costs were of interest to investors. ExxonMobil argued the average investor wouldn’t care about the internal assessment.

“The court finds these allegations to be without merit,” Ostranger wrote.

“Nothing in this opinion is intended to absolve ExxonMobil from responsibility for contributing to climate change through the emission of greenhouse gases in the production of its fossil fuel products. ExxonMobil does not dispute either that its operations produce greenhouse gases or that greenhouse gases contribute to climate. But ExxonMobil is in the business of producing energy, and this is a securities fraud case, not a climate change case.”

The suit was filed under the Martin Act, which prohibits deception in the issuance of securities. The attorney general’s office had accused ExxonMobil of deceiving investors on its management of the risks of climate change but offered no testimony “from any investor who claims to have been misled.”

“The court agreed that the attorney general failed to make a case,” an ExxonMobil spokesman told the Journal. There was no immediate comment from the attorney general’s office.