Ohio Attorney General Jim Petro said in a statement posted to his Web site that the actions which led to the lawsuit occurred before Exxon and Mobil merged. Because of Exxon’s failure to properly report the reserves’ value, when Mobil’s investors received the new ExxonMobil shares, they received far less value than they should have, Petro charged.
“By failing to properly state the value of its oil
reserves, Exxon underpaid Mobil shareholders because
Exxon grossly overstated its value,” Attorney General Jim
Petro said. “This disregard for generally acceptable
accounting principles seems to be pervasive in business
today, and my office will hold any company that tries to
mislead investors accountable for its actions.”
In addition to misleading investors, Exxon violated federal securities laws and regulations that forbid making false or misleading statements in connection with a proxy statement or prospectus, the Ohio suit claimed.
The Ohio Public Employees Retirement System (OPERS) and the State Teachers Retirement System of Ohio (STRS Ohio) have also asked in papers filed in the U.S. District Court for the District of New Jersey to be appointed lead plaintiff and that the suit be certified as a class action. Preliminary damages for the two funds are between $40 million and $120 million, Petro said.
The claims against Exxon stem from the oil company’s decision not to reduce the value of its oil fields due to a huge drop in oil prices in the late 1990s. When oil prices dropped by more than 60% in 1997 and 1998, ten of the eleven largest international oil companiesall but Exxonreported this price drop as an impairment.
Petro, a 54-year-old Republican, has pursued similar lead plaintiff slots for other shareholder lawsuits since taking office about a year ago, including actions against AOL Time Warner, Freddie Mac and Global Crossing.