logo
Share SHARE
FONT-SIZE Plus   Neg

Oracle Investor Files Lawsuit Against $200 Mln Settlement With GSA

An investor of enterprise software giant Oracle Corp. (ORCL) has Thursday sued its directors over damages caused to the company related to its $200 million whistle-blower settlement with the U.S. government. Jordan Weinrib filed the lawsuit earlier in the day in a Delaware Chancery court.

Weinrib revealed in the complaint filed by him that the directors, including CEO Larry Ellison, failed in their fiduciary duties to shareholders by not mitigating losses created by the settlement. He is seeking an unspecified amount in damages on behalf of Oracle shareholders.

"Rather than attempt to settle all claims at that time by the institution of appropriate corporate therapeutics and the paying of what would have been a small fine, the board insisted on digging in and litigating the matter extensively," Weinrib said in the lawsuit.

In early October, Oracle agreed to pay $199.5 million plus interest to settle a whistle-blower lawsuit that was filed for failing to meet its contractual obligations to the General Services Administration or GSA.

The settlement resolves the lawsuit filed on behalf of the U.S. government by former Oracle employee, Paul Frascella, who will receive $40 million as his share of the recovery in the case. Later, the Department of Justice took up the case by joining the whistle-blower lawsuit in 2010.

The settlement, the largest ever obtained by the GSA under the False Claims Act, relates to a contract Oracle entered into in 1998 to sell software licenses and technical support to government entities through GSA's Multiple Award Schedule program.

Oracle allegedly failed to comply knowingly with the price reduction clause of its GSA contract by not disclosing to GSA discounts Oracle gave to its commercial customers when they were higher than the discounts that Oracle had disclosed to GSA. It failed to pass those discounts on to government customers.

The U.S. government alleged that it accepted lower discounts and ultimately paid far more than it should have for Oracle products because of those alleged fraudulent dealings.

"Despite substantial evidence of wrongdoing, Oracle's board of directors did not admit that these acts had occurred, enact remedial measures and negotiate a resolution that involved a small payment. Instead, by litigating the case, Oracle drove up the ultimate settlement price, harming taxpayers and shareholders alike," Weinrib added in the lawsuit.

ORCL closed Thursday's regular trading session at $28.63, down $0.78 or 2.65% on a volume of 59.76 million shares.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Editors Pick
Internet access is growing worldwide, but there is still a long way to go before the entire world is completely wired, a study from the Pew Research Center has found. The study also noted that men have greater access to the Internet than women in many nations. Backtracking on its early announcements on digital privacy, WhatsApp is planning to share member information, phone numbers and analytical data with Facebook, to make revenue from the platform. Discount retailers Dollar Tree Inc. and Dollar General Corp. both reported results for the second quarter that missed analysts' expectations. Looking ahead, Dollar Tree also forecast revenue for the third quarter below analysts' estimates and lowered its full-year revenue outlook. Shares of both companies are falling in pre-market activity.
comments powered by Disqus
Follow RTT