Key Takeaways:
Cogent Communications Holdings was sued for securities fraud after its stock lost more than 80% of its value, falling from a class-period high above $86 to less than $17.
"Behind everything we do is the belief that companies should be governed responsibly, fiduciaries should be held accountable, and shareholders deserve transparency and fairness," Brian J. Robbins, founding partner of Robbins LLP, said in a statement announcing the firm's investigation.
The class action, filed on behalf of investors who purchased Cogent (Nasdaq: CCOI) securities between Feb. 29, 2024 and May 2, 2026, alleges the company made false and misleading statements about its optical wavelength business. According to the complaint, the vast majority of orders in Cogent's purported wavelength "backlog" were unlikely to ever result in paid orders, and large quantities of customers in that backlog were unable or unwilling to accept delivery. The company also allegedly misrepresented customer demand and lacked a reasonable basis for its revenue and margin targets, the suit claims. Additionally, the complaint alleges there was a material undisclosed risk that defendant Schaeffer would be forced to sell large quantities of Cogent stock due to high-risk pledging activities.
Cogent, one of the largest carriers of internet traffic globally, saw its shares peak above $86 during the class period before the disclosures emerged. The stock subsequently fell to less than $17, erasing more than $2 billion in market value. The lawsuit seeks to recover losses for affected shareholders. Investors have until a court-determined deadline to seek appointment as lead plaintiff in the case. The litigation adds legal uncertainty to a company already facing questions about its wavelength services strategy and dividend sustainability.
This article is for informational purposes only and does not constitute investment advice.
