Court Revives Oracle Shareholders Action

 
 
By Paul Elias  |  Posted 2004-09-02 Email Print this article Print
 
 
 
 
 
 
 

Citing suspicious insider stock sales, public boasting by executives and overly rosy financial forecasts, an appeals court reinstated a class action lawsuit filed by angry shareholders against Oracle and top executives.

SAN FRANCISCO (AP)—Citing suspicious insider stock sales, public boasting by executives and overly rosy financial forecasts, an appeals court Wednesday reinstated a class action lawsuit filed by angry shareholders against Oracle Corp. and top executives. The U.S. Ninth Circuit Court of Appeals said that chief executive Larry Ellisons nearly $900 million stock sale a month before the company announced disappointing financial results was "suspicious." In addition, the three-judge panel cited Ellisons public boasts in 2000 that the company was impervious to a slumping economy and subsequent rosy sales forecasts that didnt pan out in early 2001 as reasons the shareholder suit should continue. Oracle spokeswoman Deborah Lilienthal said in a prepared statement, "We believe that the allegations in that complaint are wholly unsupported by any evidence and we are confident that Oracle will prevail when the litigation is concluded."
A lower court judge had earlier tossed out the complaint, saying the shareholders had not proven that Ellison and other Oracle officials knowingly lied about the companys financial situation between Dec. 15, 2000 and March 1, 2001.
The appeals court said Wednesday theres a chance that company officials knew they were lying when they made those optimistic comments, especially given the companys advanced internal software, and that the shareholders should have their day in court. "All of our information is on one database," the court quotes Ellison as publicly stating during the time covered by the lawsuit. "We know exactly how much we have sold in the last hour around the world." During that period, the companys stock fell from $28.56 a share to $16.87 on March 2, 2001. On March 1, 2001, the company announced its quarterly earnings missed projections and that its sales forecasts were off significantly.
A month earlier, Ellison had made his first sales of Oracle stock in five years. "The timing of the stock sale is also suspicious," the court said. Between, Jan. 22 and Jan. 31, 2001, Ellison sold 29 million shares of Oracle stock—about 2 percent of his total stake—for nearly $900 million. He acquired the stock for 23 cents a share and sold it for between $30 and $32 a share. Earlier this year, Ellison announced he intended to sell up to 120 million shares of Oracle stock in 2004 and an additional 3.3 million shares to benefit the Ellison Medical Foundation. Ellison still owns more than 1.2 billion Oracle shares. Oracle shares closed 8 cents higher to $10.05 in trading Wednesday on the Nasdaq Stock Market.
 
 
 
 
 
 
 
 
 
 
 

Submit a Comment

Loading Comments...
 
Manage your Newsletters: Login   Register My Newsletters























 
 
 
 
 
 
 
 
 
 
 
Rocket Fuel