Chevron in Ecuador

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Shareholders Slam Chevron With Request for SEC Investigation Over Ecuador Judgment

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New York, NY – Chevron now faces another headache over its $18 billion Ecuador judgments – this time from some of its own investors.

A group of socially conscious shareholders led by the Unitarian Universalist Association have asked the Securities and Exchange Commission (SEC) to "make a determination" as to whether the oil giant has been violating disclosure obligations relating to the judgment.

The request was made in a letter sent Friday to Mary L. Schapiro, the chairperson of the SEC. The SEC is responsible for maintaining the integrity of the financial markets in the United States.

The letter cites a detailed report by Graham Erion, a Canadian securities lawyer, that claimed Chevron was "publishing false or materially misleading information" regarding the Ecuador judgment. An Ecuador court found last year that the oil giant deliberately dumped more than 16 billion gallons of toxic waste into the rainforest, polluting waterways covering an area the size of Rhode Island and decimating indigenous groups.

"We find the information in the report by Mr. Erion most disturbing," the shareholders wrote in their letter. "It essentially implicates Chevron management in what appears to be an extensive cover-up of the risks faced by the company regarding the [Ecuador] litigation.

"Chevron's continued failure to disclose these risks is potentially harmful to investors and the integrity of the financial markets that your agency is charged with protecting," the letter said.

Signing the letter was Tim Brennan, the Treasurer and CFO of the Unitarian Universalist Association; Sonia Kowal, from Zevin Asset Management in Boston; and Bruce Herbert, the Chief Executive of Newground Social Investment in Seattle.

The letter is the second request for an SEC investigation of Chevron in two years. In 2011, Trillium Asset Management petitioned the agency to also determine whether the company complied with its disclosure obligations.

Chevron has suffered several legal setbacks in recent months over the Ecuador matter. A U.S. federal court denied a company request to block enforcement of the judgment against Chevron's assets worldwide, while an Ecuador appellate court affirmed the trial court judgment. A background document on the evidence against Chevron is here.

Chevron also has refused to respond to letter from numerous institutional shareholders sent in 2011 calling on the company "to fully disclose ... the risks to its operations and business from the potential enforcement" of the Ecuador judgment.

"It is clear that Chevron does not consider shareholder concerns over the Ecuador matter to be a high priority," said Erion, who advises the rainforest communities in the South American nation. "Worse, it appears from the evidence that Chevron's management is trying to hide unpleasant facts in Ecuador from its own investors."

The SEC does not announce whether it is investigating a company, so it is unclear whether the agency has responded to the requests from shareholders, said Erion.