The lawsuit, filed by Hagens Berman Sobol Shapiro LLP, alleges that Cogent misrepresented the viability of its wavelength backlog, presenting it as a reliable indicator of future growth when, in reality, large portions of the orders were unlikely to convert into revenue. According to the complaint, many customers within the backlog were either unable or unwilling to accept service delivery, leading to a disconnect between reported metrics and actual market demand.

Evidence of the disparity surfaced in early 2025. On February 27, 2025, Cogent revealed a 20% sequential decline in its backlog and admitted to removing 1,500 orders that had been pending for over a year. Subsequent quarterly reports in 2025 and 2026 further eroded investor confidence, as management struggled to convert wavelength opportunities into completed installations. By February 20, 2026, the company stopped reporting backlog data entirely, a move that preceded further stock price declines. Reed Kathrein, the Hagens Berman partner heading the investigation, stated the firm is examining whether management intentionally promoted an illusory backlog to inflate the perceived value of the company.