Securities class action filed against BBSI

BBSI Securities Class Action

A securities class action was recently brought forth against Barrett Business Services, Inc., as well as certain officers.

BBSI provides business management solutions to companies worldwide. Specific services involve payroll, staffing and human resource administration. The company supplies an integrated platform that draws upon its expertise in risk management, payroll processing, employee benefits and programs designed to increase workplace safety.

Pomerantz LLP filed the lawsuit on the behalf of all organizations or individuals who bought the firm’s securities between Feb. 12, 2013 and Oct. 29, 2014. These dates are inclusive, and represent the class period.

The securities class action was brought forth in an effort to recover damages against defendants based on alleged breaches of the Securities Exchange Act of 1934. The suit was filed in the United States District Court, Western District of Washington, at Tacoma, and given the docket number 14-cv-05912.

Securities class action allegations
The Pomerantz lawsuit was one of several shareholder claims brought against the business management solutions provider, according to At the time of report, on Nov. 10, Wolf Popper LLP, The Wagner Firm and Kahn Swick & Foti, LLC, had all filed suit against BBSI, including some of its officers.

The media outlet reported that Wolf, Wagner and Kahn Swick were going to look into potential claims that the company violated federal securities laws. More specifically, these law firms alleged that the company failed to disclose material information during the class period, and that this move resulted in the business management solutions provider reporting inflated earnings.

The Pomerantz lawsuit also claimed that BBSI made false and or misleading statements, and or failed to disclose material adverse facts, about the company’s operations, business and prospects. This legal action alleged that the business management solutions provider did not reveal that it had under accrued its self-insured workers compensation reserves, and that as a result, BBSI had overstated its earnings.

Further, the securities class action claimed the company failed to maintain sufficient financial and internal controls, and that because of this deficiency, statements made by the defendants were materially false and misleading at all relevant times.

Developments surrounding workers’ reserve
On Sept. 16, 2014, an analyst accused Barrett of understating reserves in a report, according to In addition, the individual asserted the company “may be required to recognize a material charge to substantially increase its loss reserves.” Company shares plunged more than 15 percent later in the trading session.

BBSI announced on Oct. 28, 2014, after the close of trading, that its self-insured workers’ compensation reserve rose $80 million, or $47.9 million after taxes, during the third quarter of the year. This change eliminated the pre-tax earnings the company had generated over the last five years, and also contributed to a third-quarter net loss of $37.8 million, compared to net income of $9 million during the same period in 2013.

The sharp increase in the workers’ compensation reserve was worth 38 percent of the fund’s value, and as a result, the liability rose to $208.3 million as of Sept. 30, 2014. Amid the aforementioned news, company shares fell $26.18, or nearly 59 percent, to finish the trading session at $18.28 on Oct. 29, 2014.

Eligible shareholders that wish to serve in the securities class action filed by Pomerantz can move the court to serve as lead plaintiff until Jan. 5, 2012.