Ellison to Pay $122M in Settlement

A San Mateo county trial judge has approved a settlement that requires Larry Ellison, Oracle CEO, to shell out $122 million to dismiss insider trading charges.

The settlement, reached Tuesday, requires Ellison make $100 million in charitable contributions over the next five years and pay $22 million in legal fees to the law firm Berman DeValerio Pease Tabacco Burt & Pucillo.

Oracle officials would not comment on the settlement.

The settlement clears the suit brought by the firm that accused Ellison of violating California’s insider trading laws; it also acknowledges that the settlement doesn’t constitute an admission of wrongdoing.

“Ellison has asserted and continues to assert that at all relevant times, he acted in good faith, and in a manner that was in fact, and that he reasonably believed to be, in the best interests of Oracle and Oracle’s shareholders,” the settlement states.

Ellison was charged with allegedly taking proceeds of approximately $894 million from the sale of 28 million shares of Oracle stock during the Jan. 22-31, 2001 time frame, according to a statement from the legal firm, posted on its Web site. Ellison allegedly made the transactions while in possession of material adverse information regarding the company’s financial health.

While the settlement clears a path for Ellison, the legal firm itself gains from the resolution. A similar case regarding Ellison’s insider trading charges was dismissed in the Delaware courts. The Delaware Supreme Court upheld an earlier ruling that found Ellison was engaged in no wrongdoing.

“While we were optimistic as to our chances at trial, we also recognized the significant risks, given the earlier Delaware decisions and the uncertainty through trial and inevitable appeals,” the firm’s Web site states. “An additional fact considered was the possible negative impact that a public trial of Ellison — the company’s current CEO and personification — might have had on Oracle’s stock price.”

According to the settlement document, Ellison concluded that it was in his and the company’s best interest to settle the matter.

Lawyers stated the $100 million in charitable contributions is an unusual settlement. Many times, the fee is paid to the company impacted by the insider trading, but because Ellison owns nearly 25 percent of Oracle’s stock they sought an alternative.

“While in most cases a payment by an insider to the corporation would not flow back to any significant extent to the insider, a direct payment to Oracle would benefit Ellison,” the firm said.