The U.S. Securities and Exchange Commission (SEC) has launched an investigation of ExxonMobil Corp (Exxon), according to The Wall Street Journal. The investigation was launched in response to a whistleblower complaint filed with the SEC last fall that alleges Exxon overvalued a key oil and gas asset.
The whistleblower complaint concerns Exxon’s valuation of a key asset in the Permian Basin, which, located in West Texas and New Mexico, is currently the highest-producing oil field in the United States. According to the complaint, in order to reach a higher valuation of the asset, Exxon employees were forced to use unrealistic assumptions about the speed at which the company could drill wells there. The complaint states that several people involved in the valuation complained about these practices during an internal assessment in 2019.
The current status of the SEC’s investigation is unknown. ExxonMobil spokesman Casey Norton told The Wall Street Journal that “if asked by authorities about the 2019 assessment, ExxonMobil would provide information that shows ExxonMobil’s actual performance exceeded the drilling estimates.”
The whistleblower complaint supports the findings of the National Whistleblower Center’s July 2020 report on fraud in the fossil fuel industry which found that fossil fuel companies are likely engaged in accounting fraud. The report focused specifically on the prevalence of deception about the financial risks of climate change within the fossil fuel industry. The report argues that whistleblowers will be critical to the SEC’s efforts to root out fossil fuel industry fraud.
The SEC Whistleblower Program provides anti-retaliation protections to whistleblowers, including confidentiality. Furthermore, through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide the SEC original information that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of funds recovered by the government. According to the SEC, “all payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators.”
So far in the 2021 fiscal year, the SEC has awarded over $176 million to 28 individuals – a new record for the total dollar amount awarded to whistleblowers in a fiscal year. Since issuing its first award in 2012, the SEC has awarded more than $738 million to 134 whistleblowers.
Exxon Draws SEC Probe Over Permian Basin Asset Valuation