8/15/2018 1:49:00 PM
Source: Business Insurance
A federal judge in Texas has ruled that a pension fund can proceed with securities fraud litigation against Exxon Mobil Corp. and its executives.
The Pittsburgh-based Greater Pennsylvania Carpenters Pension Fund filed its securities fraud case against defendant Houston-based Exxon Mobil and executives on behalf of those who purchased the company’s stock from March 31, 2014, to Jan. 30, 2017, according to Wednesday’s ruling by the U.S. District Court in Dallas in Pedro Ramirez Jr. v. Exxon Mobil Corp., Rex W. Tillerson, et al.
According to the ruling, in mid-2014, when oil and gas prices began to fall worldwide, Exxon Mobil “did not write off or abandon assets, but instead repeatedly reassured investors that ExxonMobil had superior processes and project management that allowed it to continue operating without writing down any assets.”
The pension fund “alleges these representations were materially misleading because ExxonMobil knew it could not survive the historic drop in oil and gas prices without writing down assets,” said the ruling.
It also alleges the company made these misrepresentations to maintain its AAA credit rating and move ahead on a $12 billion public debt offering scheduled for March 2016.
In January 2017, the company said in its fourth-quarter announcement that it would record a $2 billion impairment charge “largely related to dry gas operations in the Rocky Mountain region.”
The litigation charging securities fraud claims was filed in November 2016.
In his ruling, Judge Ed Kinkeade ruled against ExxonMobil’s motion to dismiss the litigation against it.
“Pension Fund sufficiently pleaded securities fraud claims…having pleaded material misstatements” and “sufficiently pleaded loss causation,” said the ruling.
It said the plaintiff has also met the heightened pleading standard for “scienter,” which refers to knowledge of wrongdoing, in permitting the litigation to continue