Oracle Corp. won dismissal of an 8-year-old shareholder lawsuit accusing Chief Executive Larry Ellison of insider trading and misleading investors.
U.S. District Judge Susan Illston in San Francisco threw out the claims Tuesday, saying lawyers failed to show that Oracle had deceived shareholders when it said an economic slump caused the company to miss an earnings forecast. Investors alleged that problems with a software product, improper accounting practices and unrealistic sales projections, all known to senior management, were hidden from them.
Oracle shares dropped 21% to $16.88 on March 1, 2001, when the company disclosed that it would miss a fiscal third-quarter profit forecast. Shareholders, including a nurses union pension fund, alleged that Ellison improperly sold $900 million in company stock before the announcement. They accused Oracle of hiding problems with the Suite 11i database-management system released in 2000 and misleading investors about the company's financial condition.
There is no evidence that the market recognized the March 1 disclosures as revealing previously undisclosed information, Illston said in Tuesday's ruling.
Oracle, based in Redwood Shores, Calif., denied wrongdoing in court papers. Ellison sold stock to exercise options that were going to expire and had to be sold during certain trading windows, the company said.