Compass Diversified (CODI) Securities Class Action

Compass Diversified’s June 25, 2025 Admission To Accounting Irregularities:

After hours on June 25, 2025, Compass Diversified filed a Form 8-K with the SEC expanding on the company’s initial (May 7, 2025) warning that, due to irregularities at its Lugano Holding subsidiary, investors should no longer rely on its full-year and interim financial statements for the year ended December 31, 2024.

The June 25 filing discloses that, in addition to the 2024 false financial statements, “the identified irregularities also existed during fiscal years 2022 and 2023” and investors should no longer rely on those annual and quarterly financial statements.

Compass Diversified (CODI) Securities Class Actions:

The company’s May 7, 2025 disclosure of 2024 accounting irregularities ignited several securities class action lawsuits alleging that Compass Diversified made false and misleading statements while failing to disclose critical information to investors, including:

• Lugano contravened applicable accounting rules and acceptable industry practices concerning its financing, accounting, and inventory procedures throughout the now-expanded Class Period; and
• Compass Diversified neglected to implement "effective internal controls" over its financial reporting, leading to materially misstated financial results that did not accurately reflect the company's true financial standing.

On May 7, 2025, investors began to learn the truth, when Compass Diversified revealed that it "preliminarily identified irregularities in Lugano’s non-CODI financing, accounting, and inventory practices." Following discussions with senior leadership and investigators, the Audit Committee of CODI’s Board concluded that "previously issued financial statements for 2024 require restatement and should no longer be relied upon." The company also announced its intention to delay the filing of its first-quarter 2025 Form 10-Q.

The market's immediate response was severe, with the price of Compass Diversified’s stock plummeting by more than 62% on the news.

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.