New York Sues ExxonMobil for Allegedly Defrauding Investors About Climate Change

NY AG Barbara Underwood said the oil and gas company’s leadership, including former US Secretary of State Rex Tillerson, knew about this pattern of fraud for several years.
​Image: Richard Hurd
Image: Richard Hurd

On Wednesday, New York Attorney General Barbara Underwood announced a lawsuit against ExxonMobil over allegations that the multinational oil and gas company defrauded and misled investors about the effect that climate change would have on its share values.

In particular, the AG office focused on ExxonMobil’s claims that it was anticipating more stringent regulations on carbon emissions and factoring in “proxy costs” as a way to account for expected future losses. The lawsuit claims that internal proxy costs were repeatedly higher than the estimates shared with investors, and that in some cases, the proxy costs were not applied at all in public future projections of company value.


The company’s leadership, including former ExxonMobil CEO and former US Secretary of State Rex W. Tillerson, is alleged to have known about this pattern of fraud for several years.

“Investors put their money and their trust in Exxon—which assured them of the long-term value of their shares, as the company claimed to be factoring the risk of increasing climate change regulation into its business decisions,” Underwood said in a statement. “Yet as our investigation found, Exxon often did no such thing.”

“Instead, Exxon built a facade to deceive investors into believing that the company was managing the risks of climate change regulation to its business when, in fact, it was intentionally and systematically underestimating or ignoring them, contrary to its public representations.”

The NY AG office has been investigating ExxonMobil’s proxy costs for at least a year. In June 2017, The New York Times reported that John Oleske, senior enforcement counsel to the attorney general’s office, suspected that the proxy cost system may be “a sham” in one of the court filings. The new lawsuit alleges that these costs were part of an “alternate methodology” within the company that ignored the likelihood of tougher carbon regulations in the future.

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