NU Online News Service, May 20, 2004, 6:44 p.m. EDT – Several law firms say they are organizing class-action lawsuits against BISYS Group Inc., New York.[@@]
BISYS announced Wednesday that it will be restating its earnings and delaying the filing of its Form 10-Q quarterly report as the result of a move to increase a write-down of life insurance commissions receivable to more than $70 million. Earlier, BISYS had announced the write-down would amount to about $25 million.
Schiffrin & Barroway L.L.P., Bala Cynwyd, Pa., a law firm, says it has filed a class-action lawsuit in the U.S. District Court in New York on behalf of all investors who bought BISYS securities between Oct. 23, 2000, and May 17.
Similar lawsuits were filed by other law firms, including Lerach Coughlin Stoia & Robbins, San Diego, and Geller Rudman P.L.L.C., New York. Another law firm, Scott + Scott L.L.C., Colchester, Conn., says it “has commenced an investigation” of the BISYS financial restatement, which covers the years from 2001 to 2004.
BISYS sells administrative support and other services to investment firms, insurance companies and banks.
Schiffrin & Barroway’s complaint charges that BISYS and 5 of its top executives violated the Securities Exchange Act of 1934 by including “material misrepresentations” about the company’s fiscal condition in financial statements. The suit alleges the company inflated financial results, incorrectly recorded commissions receivable and lacked adequate internal controls.
A BISYS spokesman says that, as a matter of policy, the company declines to comment on pending litigation.
When BISYS announced it would be filing its fourth-quarter financial statement late, Jim Fox, the company’s chief financial officer, said he believed the commission adjustment would not have any significant impact on the company’s operating results for fiscal year 2004.
BISYS President Russ Fradin said BISYS was reaffirming that the adjustment would have no impact on the company’s current earnings guidance. For the fourth quarter, the company is expecting to report earnings of 16 cents to 18 cents per share, excluding restructuring charges and other charges.
“We also believe that we are taking the actions necessary to position our life insurance business for future growth, and we continue to expect the financial results of our life insurance business to improve in fiscal year 2005,” Fradin said.