Compass Diversified (CODI) Faces Crisis as Lugano Scandal Forces Downgrade, Investor Lawsuit - Hagens Berman

CODI Investors with Losses Encouraged to Contact the Firm

San Francisco, California--(Newsfile Corp. - June 16, 2025) - Compass Diversified's (NYSE: CODI) tumultuous spring continued as Jefferies analysts recently downgraded the company's stock amid a sweeping securities class action lawsuit filed by investors, both moves stemming from a widening accounting scandal at its Lugano subsidiary. The dual blows-Wall Street's loss of confidence and mounting legal challenges-have sent Compass's shares into a tailspin, erasing over 70% of the company's market value over the past three months and casting a pall over the once high-flying holding firm.

Hagens Berman is investigating the alleged fraud claims and urges investors who purchased Compass shares and suffered substantial losses to submit your losses now.

Class Period: May 1, 2024 - May 7, 2025
Lead Plaintiff Deadline: July 8, 2025
Visit: www.hbsslaw.com/investor-fraud/codi
Contact the Firm Now: [e-mail]
844-916-0895

Analysts Hit the Brakes

On June 9, Jefferies analysts, long bullish on Compass Diversified, abruptly shifted their stance, downgrading the stock from Buy to Hold. The catalyst: a deepening probe into accounting irregularities at Lugano Holdings, the company's luxury jewelry subsidiary. The investigation, which has already triggered a securities class action, has cast a long shadow over Compass's financial credibility.

Compass's troubles began to snowball after revelations that Lugano's former CEO orchestrated unauthorized third-party funding deals and manipulated inventory valuations. These actions forced Compass to delay its first-quarter 2025 financial filing and announce a sweeping restatement of its 2024 results. Jefferies slashed its price target to $7.30-a dramatic cut from the previous $28.00-assigning zero value to Lugano amid expectations of a protracted recovery.

Credit Rating and Stock Listing Under Pressure

The accounting scandal's fallout has not been confined to Wall Street. S&P Global Ratings downgraded Compass Diversified's credit to 'B-' and placed the company on CreditWatch with negative implications, citing unreliable financial statements and heightened uncertainty.

In response, Compass has scrambled to shore up liquidity. The company entered a forbearance agreement with lenders, suspended quarterly distributions, and halted further investment in Lugano. Leadership changes swiftly followed, with Josh Gaynor stepping in as interim CEO after Lugano's founder, Moti Ferder, "resigned."