ORLANDO, Fla. (Legal Newsline) - A securities class action lawsuit was recently filed against Rayonier Inc. and members of its executive team alleging the company misrepresented its financial results between January and November.
Brought on behalf of the Lake Worth, Fla., Firefighters Pension Trust Fund by Bernstein Litowitz Berger & Grossmann LLP and a Plantation, Fla. firm, the complaint also alleges Rayonier misrepresented or concealed from investors that its internal controls were defective.
It further claims that Rayonier, a Jacksonville, Fla.-based forest products company with timber forests in the United States and New Zealand, was engaging in unsustainable timber harvesting practices.
The class action period specified in the lawsuit starts on Jan. 27, 2014, when Rayonier announced shareholders would be best served by spinning off a performance fibers business and a corresponding overhaul of its leadership, with senior executives leaving Rayonier to join Rayonier Advanced Materials Inc.
In a U.S. Securities and Exchange Commission filing on Nov. 10, Rayonier revealed that it overstated its income by approximately $1.9 million in the first quarter of 2014 and by approximately $2 million in the second quarter, the complaint says.
By misreporting its timber inventory – some of which was learned to be in environmentally protected areas – the lawsuit claims shareholders bought stock at artificially high prices and lost money when stock fell after the company corrected the numbers. In the same report, Rayonier disclosed that “management determined that there was a material weakness in the company’s internal controls related to merchantable timber inventory,” the complaint says.
The news of the improper inventory calculation caused an approximately 15 percent drop in the price of Rayonier stock, from $33.90 per share to $28.82 per share.
The suit claims the Lake Worth Firefighters Pension Trust Fund purchased Rayonier securities on the New York Stock Exchange during the class period and suffered damages as a result of the company’s violations of the federal securities.
Robert D. Klausner of Klausner, Kaufman, Jensen & Levinson in Plantation filed the complaint, along with Gerald Silk and Avi Josefson of Bernstein Litowitz Berger & Grossman in New York.
U.S. District Court for the Middle District of Florida case number 3:14-cv-01403.