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Trinet (TNET) Securities Fraud Class Action Lawsuit

TNET securities fraud class action lawsuit

This lawsuit alleges that TriNet did not properly model medical and insurance costs for its workers compensation services, thereby overstating revenues and net income for the time period in question.  What makes these allegations partially troubling is that the industry as a whole seemed to be adjusting costs upward at a time when the company was assuring investors it did not need to do the same.

TriNet provides bundled HR outsourcing services to medium size companies.  These bundled services include services such as payroll processing, human capital consulting, employment law compliance and employee benefits, including health insurance, retirement plans and workers compensation insurance.  For health insurance and workers compensation services, the company does buy some third party insurance but also assumes some of the risk itself so forecasting future claims is critical to predict future revenues and net income.

This lawsuit alleges that TriNet made false and misleading statements or failed to disclose adverse events for fiscal 2014 and 2015, including the following:

TriNet’s processes and methodologies for analyzing and accruing claims failed to properly account for historical claims trends;

TriNet’s forecasting process failed to properly incorporate relevant historical and current claims trends;

TriNet was experiencing growing claims trends in medical and workers compensation that negatively affected the Company’s current and future business prospects; and

In light of the above, TriNet’s publicly stated financial outlook did not have a reasonable basis.

Current Case Status: 

In December 2015, the court appointed lead plaintiff and lead counsel.  The next step typically is the filing of an amended complaint.  We wil check back in mid 2016 to update the status.

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