pass Diversified LLC(CODI) GlobeNewswire News Room·2025-05-29 14:40Core Viewpoint - Shares of Compass Diversified (NYSE: CODI) fell nearly 15% in intraday trading due to troubling accounting practices at a subsidiary, leading to a securities class action lawsuit [1] Financial Measures - Compass Diversified announced urgent liquidity measures including a forbearance agreement with lenders, reduction in management fees, and suspension of quarterly cash distributions [2] - The company will also curtail new investments in Lugano Holdings, the subsidiary involved in the controversy, to focus on its other eight portfolio companies [2] Regulatory Issues - The New York Stock Exchange notified Compass that it is out of compliance with listing requirements due to delayed quarterly report filings, facing a six-month deadline to remedy the situation or risk delisting [3] Legal Actions - A securities class action lawsuit was filed in California, alleging that Compass and executives misled investors about the financial health of Lugano Holdings, claiming undisclosed financing arrangements and irregularities in financial statements [4][5] - The lawsuit contends that Compass's internal controls were inadequate and key information was withheld from shareholders [5] Financial Impact - On May 7, Compass revealed "irregularities" in Lugano's financial practices, leading to a sell-off that erased more than half of the company's market value in one day [6] - Following this, Compass announced a delay in releasing its first-quarter 2025 financial results as an internal investigation is ongoing [6] Investigative Actions - Hagens Berman is investigating potential securities violations by Compass Diversified, indicating the severity of the financial reporting issues [7]