An Oracle investor sued the company and its board yesterday, claiming they refused to cooperate in a whistleblower lawsuit that the company ultimately settled for $200 million—far more than it should have, the suit says.
Jordan Weinrib claims Oracle’s CEO and past and present board members did not consider the best interest of the shareholders when it engaged in excessive litigation over the whistleblower’s allegations. The whistleblower suit centered on a former Oracle director’s claims in 2007 that the company violated price-reduction clauses in federal contracts. The investor’s recent suit says the defendants knew those allegations were true.
"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," Weinrib said in his suit.
The Department of Justice eventually intervened in the whistleblower suit in 2010, and last year Oracle settled the case for $200 million.
"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," the suit says. Weinrib claims the excessive litigation led to a higher settlement price.
He seeks unspecified damages on behalf of all Oracle shareholders.
