SmartForce will face a $500 million class action suit in the United States for damages from investors who allege the firm operated fraud. The case, due for hearing in May next year, was initiated in 1999 by the San Francisco law firm Gold Bennett Cera & Sidener, but was only recently cleared for a full hearing by an US federal judge.
The complaint alleges SmartForce made untrue statements of material fact to induce the plaintiffs to purchase the firm's shares. It also alleges the scheme enabled defendants to sell shares at artificially inflated prices during 1998.
Defendants in the suit are named as Mr William McCabe, who served as chairman of SmartForce between 1991 and August 1998, Mr Greg Priest the former chief executive of SmartForce, and several other directors.
Mr Steven Sidener, lawyer for the plaintiffs, said the case related to misleading statements made about revenues during 1998 and bore similarities to revelations disclosed this week that SmartForce booked up to $40 million revenue earlier than it should have.
SkillSoft, the US company that recently acquired SmartForce, would not comment on the case when contacted last night. Mr Priest, now chairman of SkillSoft, said yesterday the firm had been "scrupulously honest" in reporting all its financial results.
