Compass Diversified (CODI) Faces Securities Class Action After Admitting to Accounting “Irregularities” – Hagens Berman

SAN FRANCISCO--(BUSINESS WIRE)--A securities class action lawsuit has been filed against Compass Diversified (NYSE: CODI) and certain of its executives after the company disclosed that it would restate its 2024 financial statements due to unrecorded financing arrangements and “irregularities” within its Lugano business unit. The suit, styled Matthews v. Compass Diversified Holdings, LLC, et al., No. 8:25-cv-00981 (C.D. Cal.), seeks to represent investors who purchased Compass Diversified securities between May 1, 2024 and May 7, 2025.

Hagens Berman is investigating the claims and urges investors who purchased Compass shares and suffered substantial losses to submit your losses now. The firm also encourages persons with knowledge that may assist the firm’s investigation to contact its attorneys.

Class Period: May 1, 2024 – May 7, 2025
Lead Plaintiff Deadline: July 8, 2025
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The Compass Diversified (CODI) Securities Class Action

The complaint contends that Compass made false and misleading statements and failed to disclose critical information regarding Lugano, which operates in the branded consumer goods sector. Specifically, the lawsuit claims that Lugano maintained undisclosed financing arrangements and exhibited irregularities in its sales, cost of sales, inventory, and accounts receivable.

These alleged irregularities, according to the complaint, rendered Compass Diversified's 2024 financial statements unreliable, necessitating a restatement. Furthermore, the suit alleges that Compass's internal controls over financial reporting were inadequate, contrary to previous representations.

The truth, the lawsuit claims, came to light on May 7, 2025, after the close of trading. Compass issued a regulatory filing (Form 8-K) accompanied by a press release titled "Compass Diversified Discloses Non-Reliance on Financial Statements for Fiscal 2024 Amid an Ongoing Internal Investigation into its Subsidiary, Lugano Holding, Inc." In this release, Compass disclosed that it had "preliminarily identified irregularities in Lugano’s non-CODI financing, accounting, and inventory practices." The company further stated that its audit committee had concluded that the previously issued 2024 financial statements required restatement and should no longer be relied upon.

Compass also announced its intention to delay the filing of its first-quarter 2025 Form 10-Q.

Following this disclosure, Compass's stock price plummeted 60% in a single trading day, wiping out significant shareholder value.

The lawsuit alleges that these disclosures demonstrate that Compass violated the Securities Exchange Act of 1934 by making untrue statements of material fact and omitting to state material facts necessary to make the statements made not misleading. Investors are seeking to recover losses incurred as a result of the alleged misstatements and omissions.

Hagens Berman’s Investigation

Hagens Berman, a national investor rights law firm, has announced it is investigating potential securities violations by Compass Diversified.

"We are deeply concerned about the alleged accounting irregularities at Lugano, particularly the undisclosed financing arrangements and the misreporting of key financial figures like sales and inventory, which appear to have significantly impacted the reliability of Compass Diversified's financial statements," said Reed Kathrein, the Hagens Berman partner leading the investigation. "Our investigation will focus on determining the extent to which Compass Diversified may have misled investors by failing to adequately disclose these issues and whether those failures constitute violations of federal securities laws."

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 [e-mail].

About Hagens Berman

Hagens 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.