By Kelly Cloonan

Compass Diversified disclosed non-reliance on its financial statements for fiscal 2024 and delayed its quarterly earnings amid a continuing internal investigation into one of its subsidiaries.

The company said Wednesday an investigation into Lugano Holding, its jewelry unit, identified irregularities in its non-CODI financing, accounting and inventory practices. Financial statements for 2024 now require restatement and should no longer be relied upon, CODI said.

"What has been uncovered through the investigation thus far does not reflect who we are as a business and the values we uphold," Chief Executive Officer Elias Sabo said.

CODI said the issues are limited to Lugano, of which it owns about 60%.

Lugano's Chief Executive Moti Ferder resigned from all of his positions at the company effective May 7, and will not receive any severance compensation, the company said.

The investigation, led by outside counsel and a forensic accounting firm, started following concerns about how the unit was potentially financing inventory, the company said.

Shares fell 4% to $16.50 in after-hours trading. Shares have fallen 22% in the past 12 months through Wednesday's market close.

Write to Kelly Cloonan at kelly.cloonan@wsj.com

(END) Dow Jones Newswires

May 07, 2025 17:30 ET (21:30 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.