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Berman Tabacco Announces Investigation of Compass Diversified Holdings (CODI) Concerning Accounting Practices

1. Compass Diversified Holdings faces an investigation for potential securities law violations. 2. Concerns are related to financing and accounting practices within its subsidiary, Lugano. 3. The Audit Committee has retained legal counsel for an ongoing internal investigation. 4. Compass indicated that previous financial statements should no longer be relied upon. 5. Shares of CODI fell during after-hours trading following this news.

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FAQ

Why Very Bearish?

The internal investigation and restatement of financials typically lead to loss of investor confidence, similar to past cases like Tesla's investigation which resulted in significant stock drops, often reflecting poorly on stock performance.

How important is it?

The nature of the investigation reshapes investor trust and financial stability of CODI, leading to immediate market reaction potential.

Why Short Term?

Immediate investor reactions to legal inquiries usually result in quick price adjustments, akin to situations where companies experience similar scrutiny.

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BOSTON, May 07, 2025 (GLOBE NEWSWIRE) -- Berman Tabacco announces that it is investigating potential securities law violations by Compass Diversified Holdings (“Compass” or the “Company”) (NASDAQ:CODI). About the Investigation On May 7, 2025, after the markets closed, Compass filed a Form 8-K which stated that the Audit Committee of Board of Directors “commenced an internal investigation into the financing, accounting, and inventory practices of Lugano Holding, Inc. (‘Lugano’), a subsidiary and operating segment of the Company, based on concerns reported to Company management as to these practices. Upon being notified of the concerns, Company management immediately informed the Audit Committee, and the Audit Committee promptly retained outside legal counsel to assist in conducting the investigation.” Further, Compass disclosed that “[t]he investigation, which remains ongoing, focuses on certain unrecorded financing arrangements and irregularities identified in sales, cost of sales, inventory, and accounts receivable recorded by Lugano.” Further, “the Audit Committee concluded that the Company’s consolidated financial statements and other financial information for the fiscal year ended December 31, 2024 should no longer be relied upon due to the materiality of the preliminary findings of the investigation described above.” The Compass also disclosed that, “[i]n connection with the ongoing investigation, on May 7, 2025, Mordechai Haim ‘Moti’ Ferder, resigned from his position as Chief Executive Officer of Lugano, and from all offices and directorships previously held with Lugano and its subsidiaries and affiliates.”  Shares of Compass were down in after-hours trading. Contact If you would like more information concerning our investigation, please click here: Shareholder Contact | Berman Tabacco or contact us at 800-516-9926 or law@bermantabacco.com. About Berman Tabacco Since 1982, our firm has prosecuted hundreds of securities cases on behalf of investors. The firm and its attorneys have been recognized for their work on behalf of plaintiffs, including by Benchmark Litigation, which ranked the firm as a Top Plaintiffs’ Firm and as Highly Recommended. Chambers USA recognized the firm as a leading securities litigation firm in its Securities Litigation–Mainly Plaintiff category. The Legal 500 has also ranked the firm as recommended in securities litigation. The firm has offices in Boston, Massachusetts and San Francisco, California. This notice may constitute attorney advertising.   Past results do not guarantee future outcomes.  Jay Eng, Esq.Berman TabaccoOne Liberty SquareBoston, Massachusetts(800) 516-9926Email: law@bermantabacco.com

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