(Bloomberg) -- A federal judge questioned Exxon Mobil Corp.'s claim that a securities-fraud probe by New York's Attorney General is flawed because its focus shifted from a suspected climate-change cover-up to whether investors were misled.
An Exxon lawyer argued Thursday that "shifting theory of liability" was evidence the investigation is a politically motivated effort to punish the company for not adopting the climate-change "alarmism" shared by the state's top cop, Eric Schneiderman, and other Democrats. Justin Anderson, the lawyer, spoke at a hearing in federal court in Manhattan.
“Investigations shift all the time," U.S. District Judge Valerie Caproni said to Anderson. "If that gives rise to federal-court proceedings, then the world of federal investigations will come to a halt.”
Exxon is fighting a request by Schneiderman to dismiss the suit, which seeks to derail his probe. The investigation is focusing on whether Irving, Texas-based Exxon for years withheld information about how the government's evolving view on climate change could affect the company's finances. Schneiderman and his Massachusetts counterpart, Maura Healey, have been investigating Exxon since 2015.
Caproni ended the hearing without ruling after directing most of her questions to Exxon's lawyers. She suggested the strength of Schneiderman's findings about Exxon would determine the success or failure of the investigation, rather than a courtroom battle before it's complete.
"If they're wrong, they don't have a case," Caproni said. "If they're right, you should be held to account."
"What you cannot do is say you're investigating to put pressure on an industry," Anderson said.
Anderson said there is evidence of collusion between the states, including meetings between their officials and environmentalists at a “United for Clean Power” news conference in March 2016 in Manhattan. The misuse of government power "is not a fanciful argument," he said.
Schneiderman revealed in June detailed findings from a two-year probe, including "significant evidence" that Exxon may have used two sets of numbers -- one public and one secret -- to calculate the impact of global warming on its reserves. Exxon fired back, accusing Schneiderman of distorting how the company calculates the long-term financial impact of climate change.
“We are confident that Exxon's challenges to our investigation will fail and the company will be compelled to show us its internal documents and answer our questions,” Chloe Gotsis, a spokeswoman for Healey, said in a statement.
To contact the reporter on this story: Erik Larson in New York at elarson4@bloomberg.net.
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Paul Cox, Peter Blumberg
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