Exxon Found Not Guilty of Deceiving Investors Over Climate Risks

This was the case that I commented on in L'affaire Schneiderman and noted briefly in refs a month ago. Broadly speaking though I thought the case silly and politically motivated and didn't much cover it. Summary: the City of New York decided to use some valuable taxpayer dollars suing Exxon for securities fraud and racketeering: their assertions were that Exxon had made misleading declarations to investors, and had committed deliberate fraud. The latter allegations were even less plausible than the former and NY dropped them a month back. Now Exxon has been found not guilty of the former.

The case was always stupid. In practical terms, NY was trying to show that Exxon had failed to tell investors that there were risks of "stranded assets" and that it's business could be seriously impeded by action on GW. And this is drivel because no sensible investor could possibly be unaware of those issues; there was no need at all for Exxon to tell anyone; and, anyway, they had. So the case was never about bad behaviour by Exxon; it was just an attempt to sue someone that NY didn't like on a technicality. And, deservedly, it failed.

Sadly CLN doesn't link to the judgement, so I have to go to the Dork Side for that. I've read / skimmed it all. I think that NY were hoping for a technical victory: that Exxon's words, though irrelevant to any investor's decision, nonetheless could be construed as misleading. But the judge doesn't even give them that, deciding that there must be "actual significance to the deliberations of the reasonable shareholder", and that's not going to fly. The allegations are mostly around a couple of reports from Exxon in March 2014, said to be misleading, but as the court notes "there was no evidence adduced at trial that the publication of the march 2014 reports had any market impact...". And just to grind it in, "evidence at the trial revealed that Exxon executives and employees were uniformly committed to rigourously discharging their duties in the most meticulous and comprehensive manner possible". Perhaps importantly, hizzoner notes that NY offered no testimony from any investor who claimed to have been mislead. There's also some stuff about Roger Reed, a market analyst, who didn't change anything due to the March reports, so that's pleasingly empirical. Also, NY's experts seem to have been a bit crap compared to Exxon's ("the testimony of the expert witnesses called by the Office of the Attorney General was eviscerated on cross examination").

If all this sounds like I'm gloating, I am. This was a stupid case that distracted attention from actual real world problems.

This may be a good place to link to my Exxon disclaimer, which I find I first noted in 2006 and certainly re-said in 2015.

Refs

* “Barking Cats” by Milton Friedman h/t TF