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

San Francisco, California--(Newsfile Corp. - June 19, 2025) - Compass Diversified (NYSE: CODI), a Connecticut-based private equity firm, is navigating a turbulent period marked by the recent resignation of a key director, a precipitous stock decline, and a burgeoning class-action lawsuit, all stemming from unearthed accounting irregularities at one of its portfolio companies.

Hagens Berman is investigating the 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
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844-916-0895

Board Departure Amidst Mounting Corporate Woes

Gordon M. Burns stepped down from Compass Diversified's board on June 7, 2025, a decision foreshadowed by his earlier choice not to seek re-election, citing other commitments. This departure coincides with a particularly fraught time for the firm, as it confronts the fallout from "troubling accounting practices" at Lugano Holdings, a high-end jewelry subsidiary acquired in 2021 for an enterprise value of $256 million.

In response to the escalating crisis, the firm has enacted a series of urgent, decisive measures aimed at shoring up its financial position. These include securing a forbearance agreement with its lenders, implementing a reduction in management fees, and, notably, suspending its quarterly cash distribution - a payout highly valued by its income-focused investor base.

Furthermore, Compass Diversified has announced a strategic re-prioritization, vowing to curtail new investment in Lugano Holdings. This recalibration is designed to reallocate resources and focus attention on its other eight portfolio companies, ostensibly to mitigate further contagion from the Lugano controversy.

Securities Fraud Suit

The revelation of these irregularities has ignited a securities class action lawsuit, Augenbaum v. Compass Diversified Holdings, No. 25-cv-01003 (C.D. Cal.). The lawsuit seeks to represent purchasers or acquirers of Compass Diversified Holdings' publicly traded securities between May 1, 2024, and May 7, 2025. The plaintiffs contend that during this "Class Period," defendants disseminated "false and/or misleading statements" and failed to disclose critical information.