Source: Daily Journal
On October 24, New York’s attorney general filed a lawsuit against ExxonMobil claiming the company defrauded shareholders by minimizing the expected effect environmental regulations would have on their stocks’ value, in an unprecedented attempt to hold oil companies responsible for climate change, according to the Daily Journal.
In the 96-page complaint, New York Attorney General Barbara Underwood does not attempt to hold Exxon responsible for a role in creating global warming. Instead, she makes what some observers have called an aggressive use of the Martin Act, which is a sweeping investor protection statute.
David Furbush, a securities litigation partner at Pillsbury, said the 1921 Martin Act is one of the broadest anti-fraud statutes in the country. He added that there is no private right of action under the Martin Act, as actions can only be brought by the attorney general. However, the attorney general can bring both civil and criminal actions, seeking broad relief without having to show scienter as a condition of liability.
“The complaint doesn’t look like it attempts to prove fraudulent intent because it doesn’t need to under the Martin Act,” Furbush said.