Top Oracle Executives Cleared of Insider Trading Allegations

Delaware’s highest court has cleared Oracle Corp.’s top executives of allegations of insider trading -- a ruling handed down at a time when courts are grappling with unprecedented scrutiny of directors and officers accused of putting their own interests ahead of shareholders.

With no additional commentary, the Delaware Supreme Court last week affirmed a lower state court ruling finding no evidence that either Chief Executive Lawrence J. Ellison or Chairman Jeffrey O. Henley breached their duty of loyalty to the company by selling stock in early 2001 in advance of disappointing earnings news.

In a two-paragraph opinion written Thursday, the three-judge Supreme Court panel simply deferred to the earlier ruling, a decision by Vice Chancellor Leo E. Strine, which painstakingly dismantled the plaintiffs’ arguments in the state court action, which sought damages in the name of the company.

Among the evidence highlighted by Strine in his 94-page November ruling was the absence of any “apparent rational motive” that would have led Ellison or Henley to sell small portions of their Oracle holdings because they thought Oracle’s performance was declining.

At issue were Redwood City, Calif.-based Oracle’s projections for the fiscal third quarter 2001. Wall Street estimated that Oracle’s licensing revenue would increase “about 25%” over the previous year’s comparable quarter and the company would earn 12 cents a share; Oracle missed both projections.