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Comment by adonnjohn | Hacker News Reader

Sorry, I don't really understand from the article: how exactly did the accused supposedly break fiduciary obligations? Does it solely have to do with Larry's previous involvement in NetSuite?

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Per the Reuters article [0], it sounds like Ellison had a vested interest (of the financial variety) in Oracle acquiring NetSuite at a premium unreasonably higher than NetSuite's actual value, so that's why the shareholders are suing him.

[0]: https://www.reuters.com/article/otc-oracle-idUSKCN1V91UJ

How much WeWork pays the owner for his properties would look bad through this same lens.

Self-dealing is always questionable, and it seems like we're getting a whole lot of this corruption lately.

WeWork's investors are free to sue. That would probably derail the IPO to make it net negative for them.

it’s a brilliant scheme. he also squatted domains and a trademark prior to renaming and hasn’t faced consequences for the same reason

There wont be consequences. What wework's adam did is unethical but not illegal. Same for oracle.

The difference between both however is enormous. I suspect that for in Adam wework deal(s), information hardly reached directors and certainly not shareholders.

With Oracle , everyone knew about the premium paid. And everyone , is a professional money manager and had multiple times the time to shut down the deal. They made mistake after mistake: with CEO selection, with acquisition strategy, with BoD selection, with DD, and price paid.

Shareholders were asleep at the wheel. Now they want to point fingers at someone else.

In both cases there was some unethical on behavior, but that does not make it illegal and recoverable in court

Hasn't faced yet. Let's see how this unfolds, as they say - in a bull market everyone feels like a genius.

Self dealing is no good. But is there evidence that they are paying above market rates for those properties?

I think saying that the rent is market rate doesn’t really eliminate the transfer of value away from WeWork shareholders. First, you can’t exactly calculate market rate, and rates are normally determined by a negotiation between multiple parties. When you own a rental property, you take on a risk of vacancy while seeking tenants who pay your idea of market rate. You will face the choice of taking a lower rent vs. staying vacant and holding out for more. If Adam Neumann is getting reliably paid a healthy market rate by WeWork, and WeWork is taking the hit from the vacancies, he’s getting one over on WeWork’s shareholders. Lease obligations are going to be paid out before equity. Perhaps that’s the whole point of the arrangement.

The owner and directors will almost certainly get sued at some point. Just a matter of time with these things

Does it matter if you can afford lawyers?

The Reuters article is a much better explanation, thank you for sharing it.

I think the gist is that Oracle vastly overpaid for Netsuite in order to enrich Larry.

Oracle’s raison d'etre.

True at one level. And some hypothetical country could actually have that rule as the law -- "investor beware" might work better than our real system.

But in the system as it is, Oracle shareholders bought shares on the understanding that Larry had some fiduciary duty to the owners of the company.

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