The litigation, City of Southfield Fire and Police Retirement System v. Cogent Communications Holdings, Inc., accuses the firm and its executives of violating the Securities Exchange Act. According to the complaint, Cogent allegedly inflated its optical wavelength backlog with orders that were unlikely to materialize, while failing to disclose that many customers were either unable or unwilling to accept delivery. These omissions, the suit claims, masked the company's inability to meet revenue targets and undermined the foundation of its long-standing dividend policy.

The company’s financial disclosures throughout 2025 and early 2026 triggered a series of sharp stock price declines. Following reports of slowing connections and abandoned backlog orders, Cogent eventually suspended stock buybacks and slashed its quarterly dividend by 98% in November 2025, ending a 52-quarter streak of increases. By May 2026, management acknowledged that customers were pushing back on accepting provisioned wavelengths, further fueling investor concerns regarding the company's operational viability.