NY attorney general wields powerful weapon in Exxon climate case

Fri Nov 6, 2015 8:04pm EST
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By Mica Rosenberg

NEW YORK (Reuters) - A near century-old statute that gives New York state prosecutors unusually broad authority to prosecute securities fraud could prove a powerful weapon as Attorney General Eric Schneiderman probes Exxon Mobil Corp (XOM.N: Quote) over whether the oil firm mislead the public and shareholders about the perils of climate change.

The 1921 Martin Act, a wide-reaching state law, was dusted off in the early 2000s by former New York Attorney General Eliot Spitzer who used it to aggressively go after Wall Street firms.

Since then, it has been used to prosecute large-scale Ponzi schemes, major investment banks accused of misleading investors and other cases.

Now, Schneiderman is wielding the statute in his probe of Exxon, the world's largest publicly traded oil company, according to a source familiar with the matter. The source said other state laws could be used as well.

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

In response to the probe, Exxon has said it has worked on climate science in a transparent way for nearly 40 years and has regularly disclosed the business risks of climate change to investors for years.

The investigation comes on top of reports last month by Inside Climate News and the Los Angeles Times that the company's own scientists had raised concerns about global warming decades ago that the company executives contradicted.

Under the Martin Act, the state must prove that a company deceived the public by misrepresenting or omitting a material fact in the offering of securities.   Continued...

A view of the Exxon Mobil refinery in Baytown, Texas September 15, 2008.  REUTERS/Jessica Rinaldi