In November, New York Attorney General Eric Schneiderman announced that his office would investigate ExxonMobil\u2014the world\u2019s biggest oil and gas company\u2014for misleading the public about global warming.\u00a0 Under New York law, the Attorney General has the power to investigate whether companies issue misleading statements that could amount to financial fraud.<\/p>\n
The relevant New York law in this area is known as the Martin Act.\u00a0 The Act, passed in 1921, allows the state to bring an action against a company if it can prove that the company deceived the public by misrepresenting or omitting a material fact in the offering of its securities.\u00a0 The state law is unique in the nation in that no proof of intent to deceive is required to bring a claim, and prosecutors do not even need to show that anyone was in fact defrauded. \u00a0The Act allows for criminal as well as civil charges.\u00a0 New York State’s highest court ruled in 1926 that it covers “all deceitful practices contrary to the plain rules of common honesty.”<\/p>\n
It was the Martin Act that was used by former Attorney General Eliot Spitzer to aggressively go after Wall Street firms.\u00a0 Since then, it has been used to prosecute large-scale Ponzi schemes, major investment banks accused of misleading investors and other cases.<\/p>\n
Now, Schneiderman is wielding the statute in his probe of Exxon.\u00a0 Schneiderman subpoenaed Exxon, demanding extensive financial records, emails and other documents to probe the company’s knowledge and disclosures about climate change going back to the 1970s.\u00a0 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.<\/p>\n
Exxon has now submitted thousands of its documents\u00a0to Schneiderman\u2019s office in response to the Attorney General\u2019s subpoena.\u00a0 Since his action, nearly twenty other states\u2019 Attorneys General have gotten involved in bringing charges against Exxon.<\/p>\n
Exxon is, of course, not taking these actions lying down.\u00a0 They have filed actions to block some states\u2019 investigations and have argued that they did not mislead the public.<\/p>\n
Exxon has stated that it \u201crecognizes the risks posed by climate change,\u201d and that the accusations are based on the \u201cpreposterous\u201d claim that the company \u201creached definitive conclusions about climate change before the world\u2019s experts\u201d and withheld it.\u00a0 The company shared its findings in peer-reviewed publications, it said.<\/p>\n
The pushback came from sympathetic members of the Congress as well.\u00a0 Last month, Congressman Lamar Smith, from Exxon\u2019s home state of Texas, issued a subpoena to the New York Attorney general and demanded all communications since 2012 between the AG\u2019s office and climate change activist organizations.<\/p>\n
Congressman Smith said that the Attorney General and environmental groups have secretly collaborated \u201cto act under the color of law to persuade attorneys general to use their prosecutorial powers to stifle scientific discourse, intimidate private entities and individuals, and deprive them of their First Amendment rights and freedoms.\u201d<\/p>\n
Attorney General Schneiderman fired back saying that the Congress has no authority in this area and rejected the subpoena, arguing that the request was \u201cunprecedented.\u201d<\/p>\n
Instead of a First Amendment issue \u2013 infringing on the right of a corporation to freely express its opinion \u2013 the New York Attorney General rested its argument on its power under the Martin Act.\u00a0 In effect, the AG argued, \u201cThe First Amendment \u2026 doesn\u2019t give you the right to commit fraud.\u201d<\/p>\n
While this issue is ultimately going to be decided in the courts, New York\u2019s unique law gives the Attorney General wide powers to police the securities marketplace and protect investors.\u00a0 Armed with the Martin Act, the AG can determine whether, and if so how, Exxon and other oil companies used their internal research to bamboozle the public \u2013 and investors \u2013 about the dangers of burning fossil fuels that accelerate global warming.<\/p>\n
If he succeeds, the AG may use the legal tools of his office to force the industry to confront its role in climate change.\u00a0 If that happens, this may be a turning point in history<\/p>\n","protected":false},"excerpt":{"rendered":"
In November, New York Attorney General Eric Schneiderman announced that his office would investigate ExxonMobil\u2014the world\u2019s biggest oil and gas company\u2014for misleading the public about global warming.\u00a0 Under New York law, the Attorney General has the power to investigate whether companies issue misleading statements that could amount to financial fraud. The relevant New York law […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1721","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/www.nypirg.org\/capitolperspective\/wp-json\/wp\/v2\/posts\/1721","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nypirg.org\/capitolperspective\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nypirg.org\/capitolperspective\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nypirg.org\/capitolperspective\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nypirg.org\/capitolperspective\/wp-json\/wp\/v2\/comments?post=1721"}],"version-history":[{"count":1,"href":"https:\/\/www.nypirg.org\/capitolperspective\/wp-json\/wp\/v2\/posts\/1721\/revisions"}],"predecessor-version":[{"id":1722,"href":"https:\/\/www.nypirg.org\/capitolperspective\/wp-json\/wp\/v2\/posts\/1721\/revisions\/1722"}],"wp:attachment":[{"href":"https:\/\/www.nypirg.org\/capitolperspective\/wp-json\/wp\/v2\/media?parent=1721"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nypirg.org\/capitolperspective\/wp-json\/wp\/v2\/categories?post=1721"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nypirg.org\/capitolperspective\/wp-json\/wp\/v2\/tags?post=1721"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}