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Court Rules Ellison Must Donate $100M to Charity
PokeyPenguin writes "As part of a settlement for insider trading allegations, a California judge has ordered that Larry Ellison donate $100 million to charity. CNet reports, 'The charity payments are an unusual way to settle such a case. Typically, settlement payments would go directly to the company, in this case Oracle. "But with Mr. Ellison owning a quarter of Oracle's stock, much of such a direct payment, in effect, would have gone to him."'"
The judgement doesn't make sense to me.
Typically, if someone does something bad to someone, the person doing the bad has to compensate the harmed person.
So if Ellison did something bad to the shareholders, he should pay the shareholders.
The fact that Ellison is a shareholder too doesn't matter -- all it means is, in the big scheme of things Ellison did something bad to the minority shareholders.
So Ellison could just as easily compensate only the minority shareholders -- but only as much as he hurt them.
It doesn't make sense for the judge to say, "Oh my! This case is so complex, let's just have Larry flush some money down the toilet or give it to charity, and we'll call it even."
http://www.thebricktestament.com/the_law/when_to_
You want the real justice?
The people who lost out on this -- the shareholders who's stock lost extra value because he devalued their stock unfairly -- get nothing other than a mildly warm and fuzzy feeling that a company that they own some very small part of gave a sizable charitable donation somewhere.
The lawyers, on the other hand, get $24 million in cash money.
So to punish Ellison for devaluing Oracle share prices unfairly through insider trading, thus causing financial loss for Oracle share holders, you suggest financing an Oracle competitor. Where would the justice be for the people hurt in this, the Oracle share holders?!
L.E. owns 25% of a company; this means that 25% of every payment to the company will therefore, in effect, go to L.E. The other 75% of the company's owners are supposed to receive $100m a penalty for wrongdoing by L.E. How much money must L.E. pay to the company so that the other 75% of the owners receive their $100m?
Apparently, the court found this little problem too hard to solve.
The logic here is strange and the share holders defrauded by the judge. If the goal is to make ellison 100 million poorer then this is simple:
x-0.25*x = 100 million
x = 133 million
So ellison should pay 133 million, he'll get 25% back in the book value of his stocks, and on paper be out 100 million.
On the otherhand if the idea is that oracle was defrauded 100 million, well then it's simple. He should give 100 million to oracle, regardless of his percent ownership since any injury he caused oracle came out of his pocket book too!.
Stupid decision.
Some drink at the fountain of knowledge. Others just gargle.
I believe that with lawyers being the only ones who are really "remedied" in a class-action suit, it's almost not worth it to pursue them any more. While you may end up with a judgement against the offending party, you, a member of the class that was harmed, often get nothing. This could be a real problem, as class-action suits can be an effective tool for keeping people like Ellison in line. But then, if I get nothing out of it save to contribute to some greedy law firm's bottom line (in a siginificant way, mind you), why bother?