Cogent Communications Faces Class Action Over Dividend and Backlog Claims

The litigation centers on a dramatic decline in Cogent’s share price, which plummeted from over $86.00 to below $17.00 during the class period. Represented by Joseph E. Levi of Levi & Korsinsky LLP, the complaint contends that Cogent inflated demand for its optical wavelength business by citing a backlog that failed to convert into actual revenue. Reports indicate that approximately 90% of a 2,700-unit backlog remained unfulfilled.

Beyond the wavelength business, the lawsuit targets the company’s dividend policy. After maintaining a streak of 52 consecutive quarterly increases, Cogent executed a 98% cut to its dividend, catching many investors off guard. The complaint further alleges that the company failed to disclose risks associated with forced sales of pledged insider shares. Fiduciaries—including pension funds and asset managers—are now reviewing their portfolios to determine if their losses warrant participation in the recovery effort.