Risk & Compliance

Oracle Execs Cleared of Insider Trading

Neither chairman and former finance chief Jeff Henley nor CEO Lawrence Ellison knew Oracle's profits were declining when they sold shares in 2001.
Stephen TaubDecember 1, 2004

Oracle Corp. chairman and former chief financial officer Jeff Henley and chief executive Lawrence Ellison have been cleared of charges of illegally trading on insider information, according to the Associated Press.

The two executives won a summary decision in a lawsuit stemming from trades executed in 2001, the report added. The suit was brought by a shareholder on behalf of Oracle.

The lawsuit survived an earlier effort to block it when the Delaware Chancery Court found that a special Oracle board committee wasn’t indepependent enough, according to the wire service.

On Wednesday, however, Vice Chancellor Leo Strine of Delaware’s Court of Chancery concluded that there was no evidence showing that either Ellison or Henley knew that Oracle’s profits were headed down when they sold stock in January 2001, according to the wire service.

Strine is the same Delaware judge presiding over the legal battle in Oracle’s ongoing attempt to acquire PeopleSoft Inc. Oracle is currently suing PeopleSoft over the takeover defenses built to fend off the unwanted bid. Strine is expected to hear more evidence in the case sometime in December, according to the wire service report.

In November, PeopleSoft rejected yet another takeover offer. Oracle has thus decided to launch a proxy fight.

Late last month, PeopleSoft nominated four individuals to its board: Duke K. Bristow, an economist at the UCLA Anderson School of Management; Roger Noall, a former executive of KeyCorp; Laurence E. Paul, managing principal of Laurel Crown Capital LLC, a private-equity investment firm; and Artur Raviv, a professor of finance at Northwestern University’s Kellogg School of Management.

“We believe that the current board of PeopleSoft is not acting in the best interests of stockholders and that a large majority of those stockholders are in favor of a change,” Henley said in a statement. “Though a large majority of the stockholders have already indicated their desire to sell, the current board appears intent on obstructing the will of the stockholders, we plan to give them a choice.”

In response, PeopleSoft said in a statement, “We believe that Oracle has nominated this slate to allow Oracle to purchase PeopleSoft for an inadequate price that does not reflect the Company’s real value.”

Meanwhile, Prudential Equity Group recently raised its estimates on Oracle and said if it is able to complete a merger with PeopleSoft, the deal would boost earnings per share by between 10 percent and 17 percent, according to forbes.com.