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Oracle shares fall after the company discloses that co-founder Larry Ellison canceled a pre-arranged plan to sell company stock.

The canceled trading plan was adopted on June 22 to sell 50 million Oracle shares, which would have been worth roughly $7.5 billion.

No Oracle stock was sold under the plan, and Oracle states that Ellison has no other plans to sell any of his company stock.

Oracle
ORCL

-3.65%

shares declined Monday after a disclosure that co-founder and Chief Technology Officer Larry Ellison had canceled a prearranged plan to sell company shares.

The artificial-intelligence cloud provider announced over the weekend that Ellison, one of the world’s wealthiest individuals, had scrapped a 10b5-1 trading plan adopted months earlier.

These setups shield corporate insiders from allegations of trading on sensitive, unreleased information by establishing predetermined instructions and executing trades automatically through a third party. No Oracle stock was sold under the plan, and Ellison has no other plans to sell any of his Oracle stock, the company said.

The announcement came soon after the company said Ellison had adopted a plan to unload 50 million Oracle shares, which would amount to roughly $7.5 billion worth of company stock. The plan was adopted on June 22 and was set to terminate by Oct. 24, the filing said.

Securities and Exchange Commission rules don’t require insiders to immediately disclose the cancellation of a 10b5-1 trading plan, though the change must appear in the company’s next periodic report.

The news surprised investors, sending shares down 4.6% on Monday. All three major indexes were trading in the red.

Normally, the market would view the cancellation of such massive sales as a bullish signal. However, in the context of Oracle’s recent financing, which includes stock issuance, investors fretted a bit. To make matters worse for Oracle, rising interest rates are driving up financing costs across its heavy mix of debt and equity.

While Oracle has emerged as a beneficiary of the AI boom, mounting concerns over its sizable debt load have driven a 23% decline in its share price this year. The benchmark S&P 500 index, of which Oracle is a component, has gained nearly 12% over the same period.

Much of Ellison’s wealth is tied to the company, which he co-founded in 1977. Today, he controls over 40% of Oracle, and helped guide its transition from a major player in the database market to a cloud computing giant.

The company revealed the existence of Ellison’s trading plan in a quarterly filing with the Securities and Exchange Commission on Friday. Strong cloud infrastructure revenue lifted shares, though it remains unclear whether the numbers can reassure wary investors over the long term.

Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com