Compass Lexecon Client ExxonMobil Prevails in Rare Securities Fraud Class Action Jury Trial

Plaintiffs and their experts claimed that ExxonMobil and several former executives inflated ExxonMobil’s stock by misleading investors regarding ExxonMobil’s use of carbon proxy costs to account for the costs of climate change, and by misrepresenting the amount of certain Canadian bitumen reserves and the value of certain Rocky Mountain gas assets. Plaintiffs claimed that ExxonMobil made these misrepresentations in part to avoid a credit downgrade and thus obtain a more favorable rate in a contemporaneous bond issuance. Plaintiffs and their experts further claimed that the alleged truth concealed by these misrepresentations was revealed to the market on seven corrective disclosure dates.

Compass Lexecon Senior Consultant Professor Allen Ferrell was retained by ExxonMobil at the class certification stage, where he opined that none of the alleged misrepresentations or alleged corrective disclosures had a price impact on ExxonMobil’s stock. Professor Ferrell testified at a class certification hearing on June 7, 2022. On August 21, 2023, Judge Ed Kinkeade of the United States District Court, Northern District of Texas ruled that six of the alleged corrective disclosures should be excluded based on “Dr. Ferrell’s analysis of ExxonMobil’s stock price” which found “no statistically significant price reaction...” The Court also determined that Plaintiffs claims regarding carbon proxy costs would be excluded, in part because “Dr. Ferrell’s analysis sufficiently rebut[s] the Basic presumption by showing a lack of price impact, [and] further supports Defendants’ assertion that the market did not care about the state attorneys general’s investigations into whether ExxonMobil misled investors about its internal use of carbon proxy costs.”

A three-week trial was later held from April 27–May 14, 2026. At trial, Professor Ferrell testified that ExxonMobil’s alleged misrepresentations regarding the Canadian bitumen reserves and Rocky Mountain gas assets did not cause inflation by causing a statistically significant price increase, that there was no connection between the alleged misrepresentations and the alleged corrective disclosures, that Plaintiffs and their experts ignored non-fraud related news that was released at the same time as the alleged corrective disclosures, and that Plaintiffs’ and their expert’s claims regarding ExxonMobil’s bond issuance were also fundamentally flawed.

After the conclusion of the trial, the jury returned a complete defense verdict in favor of ExxonMobil.

Professor Ferrell was supported by a Compass Lexecon team that included Adel Turki, Clifford Ang, Jonathan Polonsky, Agustina Levy, Ashley Crasto, and Issac Klein.

Compass Lexecon worked with ExxonMobil’s counsel at Paul, Weiss, Rifkind, Wharton & Garrison LLP, including Ted Wells, Daniel Kramer, Daniel Toal, Audra Soloway, Amitav Chakraborty, and Emily Miller, and with Scott Thomas at Latham & Watkins LLP.