He tossed out the proposed settlement in which Oracle Corp. was to donate $24 million to charity to settle allegations of insider trading by its CEO Larry Ellison.
"The $24 million jumped off the page. At first, I thought it was a typo," Schwartz said at the Redwood City hearing (according to the San Francisco Chronicle). "Then I kept reading and said, No, theyre not joking."
Now, lets be clear about this from the beginning: There is no solid evidence that Oracle CEO Larry Ellison engaged in "insider" trading of his companys stock back in 2001.
Ellison got sued by a group of Oracle shareholders who claim that he might have traded stock in the company—he owns about 24 percent, just enough to stay in control of what happens—in advance of bad news about earnings back in 2001.
Hes admitted no wrongdoing as part of the settlement Oracle proposed. And, his lawyer told Judge Schwartz, if he personally agreed to pay the money that would be an admission of guilt.
All we really have here is suspicion. Which is pretty much the fundamental problem: The whole question of what should be done remains centered on hypotheticals; uncertainty abounds. And Ellison is in a tight spot. He—and Oracle—need to make the lawsuit go away. But they dont want to fess up to something Ellison may or may not have done—particularly if he didnt do it. Which, when get down to it, is a fair request.
At the end of the Chronicle story, the reporter quoted one of those business experts who blamed "the environment" for Ellisons troubles.
"The environment changed with Martha Stewart and Enron," said Steve Martin, author of "The Real Story of Informix Software and Phil White," a book about a former rival of Ellisons who served two months in prison last year for securities fraud. "The outcry became, All CEOs are crooks, weve got to get them. This is an outgrowth of that.
But perhaps "the environment" is the product of a business culture that has begged to police itself and failed. Taking the easy way out by paying a fine, not doing any time.
Thats hard for CEOs and others on the business side of the equation to see. Its particularly difficult in Silicon Valley where shareholder lawsuits are seen as little more than legalized extortion. That one of the more aggressive shareholder rights attorneys—Bill Lerach—has been accused of making payments to plaintiffs he represented only increases the hostility and—how to put this politely? —self-rationalization that many in the valley and tech use to justify often sloppy board room behavior.
See, they say, Lerach really is a crook!
Perhaps. But unlike Larry Ellison, Lerach and his former firm, Millberg Weiss, may well face the long arm of the law. The U.S. Attorney has indicted two former clients of the firm and is not being very shy about the fact that their office is looking hard at the lawyers activities in relation to those clients. The firm and its name partners, Lerach and Mel Weiss, have repeatedly said they did nothing improper.
But the firm has paid a sort of price: It is not longer seen as quite as reputable as it once was, and in the law business credibility counts for a lot. If the investigation continues, the firm and its attorneys may be put out of business or worse.
Thats not true of Ellison or Oracle.
There are those who will say "of course," Ellison traded when he shouldnt have. Then they denounce the crooked system as not enforcing the law. Or there are those who claim Ellison is innocent, praise his business sense and denounce the crooked system of private justice—which comes in the form of plaintiff law suits—as further evidence of a hostile environment for business.
In this case, both sides can be right. And thats wrong.
eWEEK.com technology and politics columnist Chris Nolan spent years chronicling the excesses of the dot-com era with incisive analysis leavened with a dash of humor. Before that, she covered politics and technology in D.C. You can read her musings on politics and technology every day in her Politics from Left to Right Weblog. She can be reached at firstname.lastname@example.org.