The securities fraud class action suit alleged that SkillSoft and certain of its employees, officers and directors, violated the federal securities laws by making false and misleading statements regarding the company’s financial performance. These misstatements were due mostly to improper recognition of revenue from the sale of software licenses. As a result of these material misstatements, the company was required to restate its 1999-2002 financial statements.
The settlement approved by the US District Court for the District of New Hampshire includes a cash payment of $30,500,000 to the plaintiffs, an adoption by SkillSoft of specific corporate governance improvements, and SkillSoft’s cooperation in further claims against their accountant, Ernst and Young Chartered Accountants (EYCA). The pension fund’s lawyers, Bernstein Litowitz Berger & Grossman LLP, released a statement Tuesday outlining the details of the settlements.
The corporate governance improvements negotiated are designed to assure the independence of SkillSoft’s Board of Directors and several of its principal committees, namely the Audit and Nominating and Corporate Governance Committees. It also requires that the Board take specific monitoring actions in order to prevent the recurrence of security law violations. SkillSoft’s Board has already adopted the governance changes.
Legal action continues against SkillSoft auditors EYCA and Ernst & Young LLP.