Exxon Is Cleared Of Fraud Allegation -- WSJ
December 11 2019 - 2:02AM
Dow Jones News
By Corinne Ramey
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 11, 2019).
A New York state judge cleared Exxon Mobil Corp. of fraud
claims, saying New York's attorney general had failed to establish
that the oil giant had deceived investors about how it accounted
for the cost of future climate-change regulation.
The verdict Tuesday capped a nearly three-week civil trial
between the state and Exxon, which had spent several years fighting
the case. The company is battling similar accusations in other
state and federal courts.
In his 55-page ruling, New York State Supreme Court Justice
Barry Ostrager said the attorney general's office didn't prove that
the company had violated the Martin Act, a broad antifraud statute
commonly used to pursue financial crime, or other similar laws.
"The Office of the Attorney General failed to prove, by a
preponderance of the evidence, that Exxon Mobil made any material
misstatements or omissions about its practices and procedures that
misled any reasonable investor," Justice Ostrager wrote.
Still, he noted that the case and his ruling centered on
allegations of securities fraud. "Nothing in this opinion is
intended to absolve Exxon Mobil from responsibility for
contributing to climate change through the emission of greenhouse
gases in the production of its fossil fuel products," the judge
wrote.
During the trial, the office of Attorney General Letitia James,
a Democrat, accused the company of using two different accounting
methods -- one public, and one internal -- to project its business
costs in countries that were expected to implement policies to
combat climate change.
How Exxon planned for these costs and their potential impact on
the company's health mattered to investors, the office said, with
the omission of the information resulting in an inflated stock
price.
The attorney general estimated the damage to shareholders to be
as much as $1.6 billion.
Lawyers for Exxon said the company, while acknowledging the
existence of internal calculations, had done nothing wrong and that
a reasonable investor wouldn't expect to have access to the
information.
The company had also accused the attorney general's office of
being motivated by politics in bringing the case.
A spokesman for Exxon said the ruling affirmed the company's
position that it had provided investors with accurate
information.
"The court agreed that the attorney general failed to make a
case, even with the extremely low threshold of the Martin Act in
its favor," the spokesman said.
Ms. James said in a statement that investors are entitled to the
truth. "Despite this decision, we will continue to fight to ensure
companies are held responsible for actions that undermine and
jeopardize the financial health and safety of Americans across our
country, and we will continue to fight to end climate change," she
said.
During the trial's closing arguments, the attorney general's
office dropped two of the four fraud counts from its case.
Lawyers for Exxon argued the office shouldn't be allowed to drop
those counts and that the company deserved a ruling.
Justice Ostrager said by finding the attorney general hadn't
proved the Martin Act-related counts, his ruling also established
the company wasn't liable on the other fraud counts, which carry a
higher burden of proof.
Exxon faces a similar lawsuit in state court in Massachusetts,
whose attorney general's office has accused the company of
deceiving investors about climate-change costs.
The Massachusetts suit also accuses Exxon of violating a state
consumer-protection law by conducting a deceptive marketing
campaign.
The company also faces shareholder lawsuits in federal courts in
Texas and New Jersey that allege violations of federal securities
law and accuse the company of deceiving investors.
In all those cases, Exxon has denied wrongdoing.
Write to Corinne Ramey at Corinne.Ramey@wsj.com
(END) Dow Jones Newswires
December 11, 2019 02:47 ET (07:47 GMT)
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