Exxon Mobil Corp. won a closely watched trial over its accounting for the financial risks of climate change, in an outright rejection of New York state’s claim that the energy giant engaged in a cynical scheme to mislead investors for years.
Tuesday’s ruling, by New York Supreme Court Justice Barry Ostrager in Manhattan, is a blow to the state’s attorney general, Letitia James. In the securities fraud lawsuit, filed in October of last year, New York accused Exxon of lying to shareholders about its use of a “proxy cost” for carbon in accounting for future climate change regulation to make them think the company was being more prudent than it was.
The AG’s office “failed to prove, by a preponderance of the evidence, that ExxonMobil made any material misstatements or omissions about its practices and procedures that misled any reasonable investor,” Ostrager wrote in a 55-page ruling. New York produced no testimony from an investor who claimed to have been misled, the judge said.
Nor did it meet a lower bar. As part of its case, New York invoked the state’s Martin Act, which empowers officials to target a wide range of corporate behavior that could hurt shareholders. While New York argued that Exxon had intentionally misled shareholders, under the act it didn’t have to prove intent, or even that any investors were deceived.
