Judge rules Oracle withheld Ellison e-mails

Software giant failed to preserve evidence in lawsuit accusing the company of making false statements about its financial condition in 2001.

Oracle deliberately destroyed or withheld CEO Larry Ellison's e-mails and failed to preserve audio recordings sought as evidence in a class-action lawsuit filed against the software maker, a federal judge has ruled.

Oracle CEO Larry Ellison Dan Farber/CNET News

U.S. District Judge Susan Illston in San Francisco said Tuesday that Oracle willfully withheld tapes and transcripts of interviews that a journalist conducted with Ellison in 2001 and 2002 while researching a book about the Oracle founder called Softwar. The recordings and transcripts were stored on laptop by the author, Matthew Symonds, who directed a computer repair shop to destroy the laptop in late 2006 or early 2007, Illston said.

The lawsuit alleges the software giant made false statements about the company's financial condition in the second quarter of 2001 and made false statements about its Suite 11i business management software. The suit, filed by shareholders who held the stock when its price fell after the company reported disappointing results, also claims Ellison knew about the problems and sold about $900 million in stock before investors were told of the problems.

Ellison and Oracle knew the material was potentially relevant to claims that they made false statements about the company's 2001 second-quarter financial results and problems with the software suite, Illston said.

"The court believes it is appropriate to infer that the e-mails and the Softwar-related materials would demonstrate Ellison's knowledge of, among other things, problems with the Suite 11I, the effects of the economy on Oracle's business and problems with defendant's forecasting models," Illston said in her ruling.

Illston said the jury in the case will be instructed to assume that Ellison knew about the problems at Oracle before they were disclosed to investors. The judge also said she would take that assumption into account when deciding whether to rule in favor of investors on their claims and Oracle's requests to dismiss the case.

The case is scheduled to begin on March 30.

An Oracle representative could not immediately be reached for comment.

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