Several securities litigation firms, including The Wagner Firm,
Kahn Swick & Foti, LLC and Wolf Popper LLP have filed a class
action lawsuit against
Barrett Business Services Inc.
) and some of its officers. The lawsuit concerns possible claims on
behalf of the shareholders of Barrett pertaining to the probable
infringement of federal securities laws.
The lawsuit will represent a class consisting of the buyers of
Barrett securities between Feb 12, 2013 and Oct 29, 2014 (the
The investigation pertains to some specific statements made by
the company concerning its financial results. The law firms will
probe into the matter to ascertain if the company intentionally
misled investors about the financial situation, operational
performance and business prospects of the company.
The firms allege that Barrett breached the Securities Exchange
Act of 1934 as during the class period, the company failed to
divulge that it had accrued its self-insured workers' compensation
reserves, which resulted in an overstatement of the company's
Moreover, the complaint claims that the company's internal and
financial controls were inadequate and its statements were
materially false and misleading at all pertinent times.
On Sep 16, an analyst published a report, accusing Barrett of
understating reserves and claiming that the company "may be
required to recognize a material charge to substantially increase
its loss reserves." Reacting to the report, Barrett's stock price
tumbled over 15% later that day.
The concerns of the analyst were validated when Barrett reported
a substantial third-quarter net loss, driven by a substantial
increase in workers' compensation reserves. This contradicted
Barrett's prior representation that its workers' compensation
reserves were "reasonable and objective" based on its operational
Per the complaint which followed the company's third-quarter
2014 earnings on Oct 28, an $80 million pre-tax increase in
workers' compensation reserves in effect obliterated the company's
pre-tax earnings for the past five years, and drove its
third-quarter net loss of $37.8 million. On this news, Barrett's
stock plummeted nearly 59% on unusually heavy volume, to close at
$18.28 per share on Oct 29, 2014.
Barrett kept investors in the dark as it concealed material
information, and their investments consequently witnessed heavy
losses. This class action lawsuit seeks to recoup damages against
the company on behalf of the defrauded investors.
Barrett presently carries a Zacks Rank #4 (Sell). Some
better-ranked stocks in the outsourcing industry include Convergys
), Paychex, Inc. (
) and Vistaprint N.V. (
), each holding a Zacks Rank #2 (Buy).
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