Exxon Mobil Corp. must face a lawsuit by investors who blamed a drop in the company’s shares on the disclosure that regulators were scrutinizing its reserve accounting related to climate change.
U.S. District Judge Ed Kinkeade on Tuesday denied Exxon’s bid to dismiss the suit. Kinkeade wrote that the Greater Pennsylvania Carpenters Pension Fund sufficiently pleaded securities fraud claims against the oil giant and several executives, including former Chief Executive Officer Rex Tillerson.
In the case in Dallas federal court, investors said the Irving, Texas-based company refused to write down any of its oil and gas reserves in the face of declining oil prices.
We note that this is consistent with our comments on the fake front group Main Street Investors Coalition, which argues that shareholder proposals on climate change harm share value because on an arbitrarily selected date they have assigned, there is a stock price decline. As we have pointed out repeatedly, better information may result in a lower but more accurate stock price, giving the company’s executives and board members the information they need to make better decisions about strategy. The failure of ExxonMobil to have exactly this information — or to have it and keep it from shareholders — is exactly the basis for this lawsuit.