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Compass Diversified (CODI) Grapples with Financial Irregularities, Slashes Dividend Amid Investor Lawsuit – Hagens Berman

1. CODI shares fell nearly 15% due to accounting issues. 2. Securities class action filed against CODI for misleading investors. 3. Liquidity measures include management fee cuts and halted dividends. 4. CODI faces risk of delisting if financial reports aren't filed. 5. Investors advised to report losses amid Hagens Berman investigation.

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FAQ

Why Very Bearish?

The 15% drop and class action reflect severe investor distrust, historically leading to prolonged declines.

How important is it?

The article details critical corporate misconduct impacting stock price, urgent for investors.

Why Short Term?

Immediate financial scrutiny and legal actions will affect CODI's reputation and stock price rapidly.

Related Companies

Lugano HoldingsNYSE
SAN FRANCISCO, May 29, 2025 (GLOBE NEWSWIRE) -- Shares of Compass Diversified (NYSE: CODI) plunged nearly 15 percent in intraday Wednesday trading, as the private equity firm scrambled to shore up its finances following the discovery of troubling accounting practices at one of its subsidiaries, which has sparked a securities class action.   Hagens Berman is investigating the claims and urges investors who purchased Compass shares and suffered substantial losses to submit your losses now. Liquidity Measures Unveiled Amid Crisis The Connecticut-based investment company announced a series of urgent steps designed to bolster its liquidity. Among them: a forbearance agreement with lenders, a reduction in management fees, and a suspension of its quarterly cash distribution—a dividend cherished by income-focused investors. Compass also said it would curtail new investment in Lugano Holdings, the subsidiary at the center of the controversy, in order to concentrate resources on its other eight portfolio companies. CEO Elias Sabo assured investors, “Our diversified structure allows us to contain the issues at Lugano while continuing to support the growth of our other businesses.” Regulatory Scrutiny and Delayed Filings The company’s troubles deepened after it received notice from the New York Stock Exchange last week, warning that Compass was out of compliance with listing requirements because it failed to file its quarterly report on time. The company now faces a six-month deadline to remedy the situation or risk delisting. Investor Class Action The financial turbulence follows the filing of a securities class action lawsuit in federal court in California. The suit alleges that Compass and certain executives misled investors about the financial health of Lugano Holdings, which operates in the branded consumer goods sector. Plaintiffs claim that undisclosed financing arrangements and irregularities in sales, inventory, and receivables rendered Compass’s 2024 financial statements unreliable, ultimately forcing the company to announce a restatement. The lawsuit, brought on behalf of investors who bought Compass shares between May 2024 and May 2025, contends that the company’s internal controls were inadequate, and that key information was withheld from shareholders. The crisis came to a head on May 7, when Compass revealed in a regulatory filing that it had uncovered “irregularities” in Lugano’s financial practices. The company’s audit committee concluded that its 2024 financial statements could no longer be relied upon, prompting a dramatic sell-off that erased more than half of Compass’s market value in a single day. In the aftermath, Compass announced it would delay the release of its first-quarter 2025 financial results as its internal investigation continues. Hagens Berman’s Investigation Hagens Berman, a national investor rights law firm, has announced it is investigating potential securities violations by Compass Diversified. “The company’s recent moves to preserve cash and limit exposure to Lugano point to the magnitude of the financial reporting issues alleged in the lawsuit,” said Reed Kathrein, the partner at Hagens Berman leading the firm’s probe. If you invested in Compass Diversified and have substantial losses, or have knowledge that may assist the firm’s investigation, submit your losses now » If you’d like more information and answers to frequently asked questions about the Compass Diversified case and our investigation, read more » Whistleblowers: Persons with non-public information regarding Compass Diversified should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email CODI@hbsslaw.com. About Hagens BermanHagens Berman is a global plaintiffs’ rights complex litigation firm focusing on corporate accountability. The firm is home to a robust practice and represents investors as well as whistleblowers, workers, consumers and others in cases achieving real results for those harmed by corporate negligence and other wrongdoings. Hagens Berman’s team has secured more than $2.9 billion in this area of law. More about the firm and its successes can be found at hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw. Contact: Reed Kathrein, 844-916-0895

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