Oracle shareholder sues over whistleblower case

Oracle shareholder sues over whistleblower case

Summary: Enterprise software giant Oracle Inc. is being sued by one of its investors due to a former lawsuit.

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If claims that Oracle attempted to 'stonewall' a whistleblower lawsuit and paid a $200 million settlement fee after the case appeared in court are shown to be true, then the firm may find itself on the wrong side of the law.

An investor of the enterprise software giant, Jordan Weinib, is suing the company -- claiming that CEO Larry Ellison and both his current and previous board of directors engaged in prolonged, unnecessary litigation over the whistleblower's accusations, when the directors allegedly knew the claims were true.

Due to this, $200 million dollars' worth of 'damage' was inflicted on Oracle, which in turn has consequences for its investors.

The settlement in question was the result of a whistleblower lawsuit filed in 2007 by previous employee Paul Frascella, who accused the company of violating price-reduction clauses in federal contracts, and extending discounts to select and restricted groups.

Therefore, Oracle failed to meet its contractual obligations to the General Services Administration (GSA) under the False Claims Act. The case was settled only after a lengthy and expensive process.

After Oracle paid $199.5m plus interest, Weinrib claims the high legal costs were due to the firm "digging in and litigating the matter", even though the CEO and his team allegedly knew the whistleblower's accusations were correct. Weinrib stated:

"The board forced the government to expend additional resources litigating the action when the board knew the company was in a significant liability position and that additional litigation would certainly raise the ultimate price of settlement."

By not mitigating losses created by the settlement, the shareholder claims that Oracle failed in its duty to both him and other shareholders. Weinrib is seeking an unspecified amount in damages.

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Topics: Security, Banking, Hardware, Mobile OS, Mobility, Oracle, Smartphones

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4 comments
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  • I don't get it!

    Here we have a common case of a big corporation who failed in an attempt to "strong-arm" the whistleblower into lengthly litigation in the hope that the little guy's resources run dry and the law suit is dropped. This time, the little guy won and won big! Now the greedy investor want's a share of the "take" and will certainly cause more costs, anguish and loss for the company and shareholders. Yes, what Oracle did was wrong and they were rightfully punished. IMO, what Jordan Weinib is doing is also wrong and should be rightfully punished.
    toomuchtime
    • A case of gambling with others money and losing?

      How about you read the article again. The little guy in the first case was the GSA, not the whistle blower. Oracle were punished for over charging the GSA as a result of the first case. What the second case alleges is that Oracle knew that they had over charged the GSA before the first case started, and went ahead and litigated the first case anyway. If the allegations are proved true, Oracle have not been punished for losses incurred by their investors (and should be).
      I'm not sure what the investor is trying to gain. Any financial reward will come from his own investment. Maybe he's trying to embarrass the Oracle board into stepping down.
      dougbaker
      • What the investor is trying to gain

        "I'm not sure what the investor is trying to gain."

        Companies buy liability insurance for the executives and directors for situations like this. Note how the quote talks about what the board did and knew. That and the corporate officers are the real target of the lawsuit. The lawyers filing the suit will try to make it a class action so they wind up representing all shareholders, then settle and collect huge sums of money for their work. They need to have one shareholder to use to be able to file the complaint in the first place, though. That's Jordan Weinib in this case. Although the complaint and statements are in his name, it's probably really being driven by the lawyers.
        eschmenk
  • So let me get this right...

    Jordan Weinib wants Oracle to be punished for being punished? If I'm an Oracle stockholder, and Weinib/lawyers/class action whatever fail - they will have cost Oracle money.

    Can I sue them for negatively impacting my stock holdings?
    Chris The Computin' Goo-roo