NY Attorney General Schneiderman Targets Exxon Mobil: Climate Thuggery, Part 1

schneidermanNew York attorney general Eric Schneiderman could severely depress Exxon Mobil stock values while piously claiming to protect shareholders from fraud. Welcome to the Orwellian world of climate-policy sanctimony.

Schneiderman “has begun an investigation of Exxon Mobil to determine whether the company lied to the public about the risks of climate change or to investors about how such risks might hurt the oil business,” the New York Times reported last week. According to the Times, Schneiderman is investigating the company under the State’s 1921 Martin Act, the envy of regulatory bullies throughout the land. The statute gives New York’s AG “extraordinary powers and discretion” that “exceed those given any regulatory in any other U.S. State” (Wiki). As one commentator describes it:

The purpose of the Martin Act is to arm the New York attorney general to combat financial fraud. It empowers him to subpoena any document he wants from anyone doing business in the state; to keep an investigation totally secret or to make it totally public; and to choose between filing civil or criminal charges whenever he wants. People called in for questioning during Martin Act investigations do not have a right to counsel or a right against self-incrimination. Combined, the act’s powers exceed those given any regulator in any other state.

Now for the scary part: To win a case, the AG doesn’t have to prove that the defendant intended to defraud anyone, that a transaction took place, or that anyone actually was defrauded. Plus, when the prosecution is over, trial lawyers can gain access to the hoards of documents that the act has churned up and use them as the basis for civil suits. “It’s the legal equivalent of a weapon of mass destruction,” said a lawyer at a major New York firm who represents defendants in Martin Act cases (and who didn’t want his name used because he feared retribution by [former AG Eliot] Spitzer). “The damage that can be done under the statute is unlimited.”

According to Deschert LLP, the Martin Act sets a low bar for establishing guilt. To convict a company of fraud, the AG does not have to show evidence of scienter – an intent to mislead. All he has to show is that the company misrepresented a “material fact” about its securities, and the Act defines “misrepresentation” broadly to include omissions of material facts as well as affirmations of false facts. By that logic, if Exxon Mobil’s public statements on climate-change or oil-market projections omit worst-case scenarios the company does not regard as credible, then it is guilty of defrauding shareholders.

Apparently, Schneiderman wants to build a case that Exxon Mobil misrepresented the seriousness of climate change risks, hiding from investors the financial risks the company will face when science triumphs over denial and governments act to curb the production and use of fossil fuels.

Political Context and Alleged Evidence

Schneiderman’s investigation is conveniently timed to build on the green campaign demanding a Justice Department investigation of Exxon Mobil under the Racketeer Influenced and Corrupt Organizations (RICO) Act. Campaigners cite recent reports by the L.A. Times and Inside Climate News (ICN) allegedly revealing that Exxon Mobil knew the awful truth about climate change since the 1970s yet hid the risks from policymakers and the public in the 1990s and 2000s. Sen. Sheldon Whitehouse (D-R.I.) called for a RICO investigation in May — months before the L.A. Times and ICN published their reports. Both Democratic presidential front runners, Hillary Clinton and Bernie Sanders (D-Vt.), said they will call for a federal probe if elected.

In fact, all the documents reveal is that Exxon Mobil closely monitored and contributed to climate science in the ’70s and ’80s, that the “consensus” then, as now, was based on climate models with rather large acknowledged uncertainties, and that some Exxon scientists worried about worst-case scenarios.

For example, ICN cites an August 1981 memo from Exxon manager Roger Cohen arguing it is “distinctly possible” that the warming trend after 2030 “will indeed be catastrophic.” ICN also cites other ’80s documents opining that climate sensitivity (the long-term warming after a doubling of atmospheric CO2 concentration) is 3.0 ± 1.5°C, and that unchecked consumption of fossil fuels will increase global average temperatures by 2ºC-5ºC during 2000-2100.

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Comments (5)

  • Avatar

    prestigio

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    has the ny state
    atty gen office become a

    racketeer influenced corrupt org

  • Avatar

    Amber

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    Without very substantial cause to go on a witch hunt
    the NY AG is ,with intent , knowingly damaging Exxon’s reputation causing huge loss in value shareholders and harming the reputation of senior management .
    Ny State can expect a counter lawsuit in the $$Billions over this foolish attempt to intimidate
    one company in the energy sector who has a track record of doing it’s home work and adopting progressive measures to improve the environment .

    No oil company forces the State of New York to operate it using fossil fuel .
    To borrow a page out of New York’s hymn book ,
    when did they know fossil fuels were causing the earth to have a fever and why have they continued
    to purchase fossil sourced energy ?

    New York picked the wrong company to bully .

  • Avatar

    Al Shelton

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    By what authority is Eric Schneiderman qualified to determine if Exxon lied or did not lie.
    If Eric is a Warmist, then Exxon lied. If he is a skeptic then Exxon did NOT lie. [or vice-versa]

    • Avatar

      JayPee

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      Scheistermann is an arrogant idiotlogue who must have his way because he is right and anyone who disagrees is categorically and CRIMINALLY wrong.

      Naturally as a poster-boy leftist, he has it backwards.

      HE IS THE CRIMINAL.

      His accusees are victims of his drug driven treachery.

  • Avatar

    Amber

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    What a convenient Act ,the Martin Act . Short the company stock to be targeted by the NY AG who appears to have no need to justify destroying shareholder investments and ultimately the jobs of the companies employees .

    No one forces consumers to purchase legal products like gasoline or jet fuel to get to the Paris green gala .

    The USA rejected Kyoto and fossil fuel production in the USA has doubled under the Obama Administration . Does that sound like a situation where producers of a legal product should be warning shareholders of some policy risk ?

    Climate models have been proven to grossly exaggerate any warming that has been almost non existent for almost 20 years and the public itself sees as an extremely low priority .

    The fact is if temperature data has been altered by NOAA and even requests by Congress for detailed records have been rebuffed .

    There is a fraud going on and perhaps companies have been negligent in not telling shareholders the truth about how bad they have been mislead
    by the conmen running the “earth has fever ” sting . Of course most shareholders have probably figured that one out years ago .

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