By now you should be well aware of the recent ExxonMobil stock index plunge.
This was a result of the company’s failure to provide investors with sufficient information about its ability to keep up with a growing threat from China.
The company is facing a severe liquidity crunch due to China’s capital outflows and a significant amount of debt, as well as the prospect of increased competition from Chinese companies.
The ExxonMobil portfolio was one of the largest holdings of the S&P 500 as of the end of September.
It is now worth around $5.8 trillion.
This includes the shares of ExxonMobil itself, ExxonMobil Capital, and ExxonMobil International.
In the aftermath of the Chinese financial crisis, investors have been asking for more information about the future of Exxon Mobil, particularly after the company was reported to be under scrutiny from the Department of Justice (DOJ) for its alleged lack of transparency.
In the months since, the SEC has been investigating ExxonMobil over its disclosure of $7.2 billion of dividends paid to employees in 2013 and 2014.
The SEC is investigating Exxon Mobil for violating the Clayton Act and Securities Act of 1933.
The DOJ is also investigating Exxon for alleged securities fraud.
The DOJ and SEC have not yet released any public information about their investigations, but in an interview with the Financial Times, the acting head of the SEC’s Enforcement Division, Steven T. Shapiro, suggested that the investigation may take a different direction.
Shapiro told the FT that the SEC may seek to expand the investigation beyond the initial $7 billion in the SEC filing, or to include other companies.
“We’re not sure what the exact direction of that investigation is,” Shapiro said.
“We do know that ExxonMobil is not in compliance with the Clayton and Securities act, so we’re looking at a whole range of things.
We’ve had discussions with the SEC about that.”
Shapimat said that, in the short term, he expected that the Justice Department and the SEC would seek to conduct a more limited investigation, while the SEC and DOJ are continuing to look into whether ExxonMobil was in fact in compliance.
The potential for an expanded investigation is significant.
As of today, the Securities and Exchange Commission (SEC) has filed a lawsuit against ExxonMobil for failing to disclose $5 billion of the $7 million it paid to former employees.
The lawsuit claims that Exxon has violated the Clayton act by failing to provide the SEC with information about how it would comply with the agency’s subpoena requests, as required by the act.
The SEC filed its complaint in federal court in Houston.
At this point, the DOJ and the Securities & Exchange Commission have not made any public statements on the potential expansion of their investigations into ExxonMobil.
But if a broader investigation were to occur, it is possible that Exxon could face a higher fine than the $4.7 billion that was previously expected.
The lack of information about ExxonMobil’s financial situation was the subject of a recent article in the Wall Street Journal, which revealed that Exxon Mobil has been paying $3.7 million in back taxes to the Internal Revenue Service (IRS) since 2005.
It was previously reported that Exxon paid $4 million to the Treasury in back tax credits over the same period.
While the IRS has a strong interest in keeping the public informed, it has also a responsibility to ensure that tax information is accurate and up to date.
This is a very complicated and challenging task, and it’s important that the IRS keeps an open mind about the accuracy of the information that Exxon is releasing.
The Securities and Exchanges Commission is currently reviewing the DOJ’s complaint and the proposed SEC investigation.
A decision on whether to bring criminal charges against Exxon Mobil is expected in the coming weeks.
The Wall Street, ABC News, Reuters, and the Associated Press did not take part in the reporting of this story.