Meantime the unsolicited bid from SoftKey International Inc for Fremont, California-based the Learning Co – which had already accepted a lower offer from Broderbund Software Inc, has turned nasty. The Learning Co has filed a lawsuit against SoftKey alleging that Softkey violated federal securities laws, and SoftKey has hit back with a countersuit. The complaint alleges Softkey failed fairly and completely to disclose material information to Learning Co shareholders and failed to comply with laws covering the sale and distribution of securities. It claims Softkey failed adequately to disclose why it did not release its 1993 financial results until 1995; Softkey failed to disclose improper financial reporting practices that obscured a negative cash flow; Softkey failed to adequately disclose it dismissed its auditor; Softkey failed to disclose why Deloitte & Touche resigned as outside auditor for Spinnaker Software Inc, one of the constituent companies of Softkey; Softkey failed to disclose its efforts to boost the market price of its shares by selectively disclosing financial information; failed to disclose plans to alter the marketing strategy for Learning Co software; and failed adequately to disclose plans to cut research and development spending at Learning Co. The countersuit from SoftKey purports to be to prevent alleged continuing violations of federal securities laws by Learning Co and Broderbund. It alleges that Learning Co and Broderbund have been making false and misleading statements including denigrating SoftKey’s business, management and prospects, in connection with SoftKey’s hostile bid for Learning Co.
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