In re Oracle Corp. Derivative Litigation

Oracle Corp. (Oracle) shareholders alleged that four board members had engaged in insider trading by selling stock in January 2001, just before Oracle announced disappointing earnings in March. Oracle's board formed a litigation committee of two members who hadn't served on the board during the alleged trading, but both were Stanford University business professors, and Stanford had received significant donations from the very directors accused of insider trading — one of whom was also a Stanford professor, and another of whom sat on a Stanford board. The committee's detailed report found no insider trading and recommended dismissing the litigation as not benefiting Oracle, but never disclosed the accused directors' financial ties to Stanford. Oracle moved to dismiss the derivative suit based on the committee's findings.