The lawsuit, filed by the City of Southfield Fire and Police Retirement System, alleges that Cogent and its executives obscured the reality of the company's optical wavelength business. According to the complaint, a significant portion of the reported order backlog was comprised of customers unlikely or unable to complete purchases. This allegedly led to inflated demand metrics and unrealistic revenue projections that failed to account for the company's actual financial capacity.
Beyond backlog issues, the litigation targets the company’s dividend stability and the personal financial activities of CEO David Schaeffer. The suit claims that the firm failed to disclose risks associated with Schaeffer’s stock-pledging practices, which allegedly created downward pressure on share prices once the underlying business issues surfaced. Investors seeking to participate in the recovery process are being represented by the law firm Kahn Swick & Foti, LLC, which is currently managing the lead plaintiff application process.
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