Compass Diversified (CODI) Investigation

Stock Rout Follows Internal Investigation at Lugano Subsidiary

The steep selloff followed the company’s disclosure of an ongoing internal investigation into Lugano’s financing and accounting practices. The probe, led by outside counsel and a forensic accounting firm, has already identified irregularities in Lugano’s inventory and non-Compass financing arrangements. As a result, the company said it would delay filing its first quarter 2025 financial report and restate its 2024 results.

Leadership Shake-Up and Corporate Fallout

The fallout extended to Lugano’s founder and chief executive, Moti Ferder, who resigned from all positions on May 7 and will not receive severance.

The probe has already exposed significant irregularities in Lugano’s financing and accounting practices, prompting the company to disavow its 2024 financials and acknowledge the need for a comprehensive restatement. “What has been uncovered through the investigation thus far does not reflect who we are as a business and the values we uphold,” said Elias Sabo, Compass Diversified’s chief executive, signaling both the seriousness of the issues at Lugano and the company’s attempt to distance itself from the subsidiary’s conduct.

FREQUENTLY ASKED QUESTIONS ABOUT THE CASE

What is the CODI investigation about?

Our focus is on whether shareholders were misled and whether the company’s disclosures met their obligations under federal securities laws.

WHAT SHOULD I DO?

I worked at CODI. What should I do?

If you were an employee of CODI, you may have valuable information that could be relevant to the investigation. Hagens Berman is one of the nation’s top whistleblower law firms, and has successfully represented many individuals who come forward with information regarding corporate malfeasance. Under the new SEC Whistleblower 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, contact Reed Kathrein at 844-916-0895 or [email protected].

There are multiple law firms participating, do I need to contact all of them?

No, you do not need to contact all participating law firms. Generally, class-action investigations and lawsuits are consolidated into a single case to streamline the legal process, and attorneys from only a few law firms are selected to serve in a leadership role on the consolidated case. Hagens Berman has a proven track record of being appointed to leadership roles in complex, multidistrict litigation regarding investor fraud and other consumer rights issues, and your claim will be handled by attorneys who have helped secure approximately $325 billion in class-action settlements on behalf of individuals who have suffered due to corporate malfeasance and the wrongdoing of other powerful institutions.

AM I ELIGIBLE?

What is the threshold amount to be eligible? What are “substantial” losses?

The threshold amount and the definition of "substantial" losses may vary depending on a number of factors specific to the case, including the size of the company, market cap, shares outstanding and who holds them and the damages alleged by the fraud. In general, to be eligible to participate in a class-action lawsuit, you must be able to demonstrate that you suffered financial losses as a result of the alleged wrongdoing and that your losses meet the criteria set by the court or law firm. Fill out the form and submit your losses.

CAN I PARTICIPATE?

Am I affected? What do I need to do to participate?

If you were an investor in CODI, you may be affected and eligible to participate in the case. To determine your eligibility and potential involvement, fill out the form and submit your losses.

Can any CODI investor participate?

In most class-action investigations and cases, any investor who meets the eligibility criteria, including purchasing the shares during the relevant period, can participate, regardless of the size of their investment. Fill out the form to find out your rights.

I bought on a non-U.S. Exchange. Can I participate?

No. This investigation only covers shares bought on a U.S. exchange, i.e. NASDAQ or NYSE. Fill out the form to find out your rights.

Am I included if I still hold my shares, or do I need to sell to participate?

Participation is based on purchasing shares during the relevant period, rather than your current holdings. Accordingly, you do not need to sell to participate. Fill out the form to find out your rights.