Key Takeaways:
Kahn Swick & Foti sued Cogent Communications Holdings (CCOI) over undisclosed demand and backlog issues tied to a 29 percent stock decline.
"Investors who purchased Cogent shares during the Class Period should review their legal rights before the September 21 lead plaintiff deadline," Lewis Kahn, managing partner at Kahn Swick & Foti, said.
The securities fraud class action, filed in the US District Court for the District of Columbia, covers shares bought between February 29, 2024 and May 1, 2026. The complaint alleges Cogent overstated demand for its optical wavelength services and misrepresented the nature of its reported backlog, which reached roughly 2,700 units before up to 90 percent was lost. Cogent also cut its dividend by 98 percent after 52 consecutive quarters of increases.
The case, City of Southfield Fire and Police Retirement System v. Cogent Communications Holdings, No. 26-cv-02609, seeks to recover losses for shareholders. Investors must petition the court by September 21, 2026 to serve as lead plaintiff.
The complaint charges Cogent and certain executives with failing to disclose that most orders in the optical wavelength backlog were unlikely to become paid orders, that many customers were unable or unwilling to accept delivery even if services were provisioned on time, and that the company was not on track to meet its publicly stated revenue and margin targets. It also alleges founder, CEO and Chairman David Schaeffer's stock pledging created an undisclosed risk of a forced sale that could further depress the share price.
Cogent shares have fallen sharply since the Class Period began, declining from more than $86 to below $17 at one point, a drop of more than 80 percent. The company reported a 20 percent sequential decline in its backlog in February 2025 and removed 1,500 orders that were more than a year old, according to Hagens Berman Sobol Shapiro, which is also investigating the company. Cogent stopped disclosing backlog data in February 2026.
The lawsuit adds legal pressure on Cogent as it works to restore investor confidence after the backlog and dividend disclosures. Investors will watch for the court's lead plaintiff appointment and any further company disclosures ahead of the September 21 deadline.
This article is for informational purposes only and does not constitute investment advice.
