pass Diversified LLC(CODI) Prnewswire·2025-05-09 21:49Core Viewpoint - A securities class action lawsuit has been filed against Compass Diversified due to the company's announcement of a restatement of its 2024 financial statements, which were affected by undisclosed financing arrangements and irregularities in its Lugano business unit [1][4]. Group 1: Lawsuit Details - The lawsuit, Matthews v. Compass Diversified Holdings, LLC, seeks to represent investors who purchased Compass securities between May 1, 2024, and May 7, 2025 [1][2]. - The complaint alleges that Compass made false and misleading statements regarding its Lugano unit, which operates in the branded consumer goods sector, and failed to disclose critical information about undisclosed financing arrangements and irregularities in sales, cost of sales, inventory, and accounts receivable [2][3]. Group 2: Financial Impact - The alleged irregularities necessitated a restatement of Compass Diversified's 2024 financial statements, rendering them unreliable [3]. - Following the disclosure of these issues, Compass announced a delay in filing its first-quarter 2025 Form 10-Q, leading to a 60% drop in its stock price in a single trading day, significantly impacting shareholder value [5][6]. Group 3: Regulatory Violations - The lawsuit claims that Compass violated the Securities Exchange Act of 1934 by making untrue statements of material fact and omitting necessary information that would prevent the statements from being misleading [6]. - Hagens Berman, the law firm investigating the claims, expressed concern over the alleged accounting irregularities and the potential misrepresentation of financial figures that could have misled investors [8].