Suit Against Oracle Chiefs Dismissed
A judge dismissed a lawsuit against Oracle Corp. Chief Executive Larry Ellison and Chairman Jeffrey Henley that accused them of insider trading before the company announced an earnings shortfall in 2001.
Delaware Chancery Court Judge Leo Strine Jr. said that “no rational trier of fact” could find that Ellison or Henley, who was chief financial officer at the time, had nonpublic information when they made the trades and dismissed the suit ahead of trial.
“The record simply will not support a rational inference of wrongdoing, even given the plaintiff-friendly standard that applies on a motion for summary judgment,” Strine wrote in his order dated last week.
The decision comes as Ellison awaits a separate ruling from Strine on Oracle’s bid to invalidate PeopleSoft Inc.’s takeover defense.
Redwood City, Calif.-based Oracle, the world’s third-largest software maker, has spent 17 months trying to buy Pleasanton, Calif.-based PeopleSoft.
The shareholder lawsuit claimed that Ellison and Henley sold Oracle stock in January 2001 while knowing that the company was unlikely to meet its publicly announced earnings and revenue projection for the quarter ending Feb. 28, 2001.
Attorneys for Ellison and Henley argued that the majority of Oracle’s licensing revenue typically comes in during the final weeks of a quarter. Many customers in this particular quarter refused to close deals within the final days, leaving Oracle executives “surprised and dismayed at the rapid deterioration of their units’ results,” Strine wrote.
In September, a federal appeals court in San Francisco reinstated a separate shareholder lawsuit that claimed Oracle improperly booked $228 million in sales in 2000 to conceal slowing demand.
That lawsuit also claimed that Ellison and Henley sold shares while the stock was at inflated levels.
Ellison, 60, co-founded Oracle in 1997 and is the company’s largest shareholder. During the period covered by the suit, he sold 2% of his shares for about $1 billion, then lost about $18.9 billion after the shares plunged, Strine wrote.
Shares of Oracle, which reported $10.1 billion in fiscal 2004 sales, rose 2 cents to $12.68 in Nasdaq trading.
