Paycom faces class action lawsuits over alleged securities fraud

Investors are taking legal action against Paycom (NYSE:) Software, Inc., with two prominent law firms, Pomerantz LLP and The Law Offices of Vincent Wong, spearheading class action suits. The litigation stems from accusations that the company did not fully disclose the negative impact its Beti product had on financial performance, leading to a significant drop in share price and unmet revenue targets.

On Tuesday, Paycom’s stock was already under scrutiny after Pomerantz LLP announced an investigation into potential securities fraud. Investors who believe they have been affected by the alleged misconduct were advised to contact attorney Robert S. Willoughby for guidance on class action litigation.

The controversy began after an earnings call on October 31, where Paycom reported third-quarter revenues of $406.3 million, falling short of the anticipated $410-$412 million. The underperformance was attributed to the Beti technology adversely affecting service revenues.

The announcement triggered a sharp decline in Paycom’s stock value, which plummeted by $94.28 the following day, closing at $150.69.

Adding to the legal challenges facing Paycom, Vincent Wong’s Law Offices initiated a separate class action on the same day as Pomerantz’s announcement. This lawsuit invites shareholders who purchased shares between May 3 and November 1 to submit claims through an online form at no cost. The suit alleges Paycom failed to disclose how Beti was detrimental to its financial health and resulted in missed third-quarter revenue goals and a downward revision of annual forecasts.

Furthermore, Paycom’s expected year-over-year revenue growth for the next year has been adjusted to a modest 10%-12%. Shareholders seeking to be lead plaintiffs in this case have until January 9, 2024, to apply.

Pomerantz LLP is known for specializing in corporate litigation and damage recovery for victims of corporate misconduct, with a history of securing substantial recoveries for its clients. Both law firms are now actively seeking participants for their respective class actions as they prepare to hold Paycom accountable for the alleged financial discrepancies.

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