A retired engineer from Exxon Mobil Corp. alleges the giant energy company violated its responsibility to protect employee financial interests by continuing to offer Exxon Mobil stock for its 401(k) retirement plan while knowing the company’s stock was artificially inflated in value, according to a lawsuit filed in U.S. District Court in Houston last week.
Bobby Fentress, an engineer who worked for Exxon Mobil in Oklahoma, sued Exxon Mobil and several executives who manage the 401(k) plan on behalf of 43,000 employees who invested in company stock between Nov. 1, 2015 and Oct. 28, 2016. The lawsuit is seeking class action status.
Shares of Exxon Mobil stock reached $95 a share in mid-July, but dropped to $82 by late September following news reports that federal regulators were investigating the company’s reserve accounting provisions and the value of its oil and gas reserves. Exxon Mobil revealed in October that it may be forced to write down its oil and gas assets by nearly 20 percent.
The company and its 401(k) directors, through their high-level jobs, either knew about the problems in advance or should have known, Fentress alleged in the lawsuit.
At that point, the retirement savings plan should have halted new purchases of Exxon Mobil stock because it was no longer a “prudent investment option,” according to the lawsuit. Or the savings plan could have bought low-cost “hedges” to protect against a downside risk if stock prices fell, according to the lawsuit.
A statement from Exxon Mobil called the lawsuit “frivolous” and the allegations false. “We will defend ourselves and are confident our financial reporting and communications with investors fully comply with all legal and accounting requirements,” said Scott J. Silvestri, an Exxon spokesman.