The lawsuit points out that Ellison allegedly lied about a claim that Oracle saved US$1 billion through using its own software and goes on to accuse Ellison of insider trading.
According to the suit, the company did not achieve savings of US$1 billion through the use of its own software, but instead cut costs by laying off staff.
The suit also alleges Oracle’s 11i software suite is laden with bugs and that the company overstated potential sales of the software.
The law firm stated that Ellison knew Oracle’s billion dollar savings was not the result of the synergies created by Oracle’s 11i product, but rather, his decision to terminate more than 2000 employees.
They also claim that Ellison actually knew that the suite was fraught with massive technical problems, including giant gaps in its CRM modules, and required extensive systems integration work to implement.
The insider trading allegations arose over the fact that Ellison allegedly sold almost US$900 million worth of his own Oracle stock at prices as high as US$32 a share, a month before the company issued an earnings warning on its Q3 performance which lead to Oracle shares dropping 21 percent that day to US$21.38.
This appeared to be the largest insider trading in the history of the US financial market. “These sales were out of line with Ellison’s prior trading history as he had not sold any shares for five years prior to these sales,” the firm said.
This is one of the first shareholder suits filed since Oracle's March 1 warning and may usher in similar complaints. Share prices have fallen more than 65 percent from their 52-week high of US$46.47 on Sept. 1.
The California based Oracle has seen a press release concerning the lawsuit, though it hasn't received the complaint, said spokeswoman Jennifer Glass. The allegations in the press release are "entirely without merit and will be defended vigorously," she said.
Customers of Oracle, this is your chance to stand by Ellison and come forward to say that the software did save you millions if not US$1 billion.