Rayonier Inc. hit with securities class action lawsuit

By Legal News Line | Nov 19, 2014


A securities class action lawsuit was filed against Rayonier Inc. and members of its executive team, alleging the company misrepresented its financial results between January and November of 2014.

Brought on behalf of the Lake Worth (Florida) Firefighters Pension Trust Fund by Bernstein Litowitz Berger & Grossmann LLP, the complaint also claims Rayonier misrepresented or concealed from investors that its internal controls were defective.

It further claims that the Jacksonville, Florida-based forest products company with timber forest in the United States and New Zealand was engaging in unsustainable timber harvesting practices.

The class action period 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.

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 news of the improper inventory calculation caused a nearly 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.

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