The scrutiny follows a disclosure from Scotts regarding a 6% decline in quarterly sales and a 420-basis-point drop in gross margins. Management also slashed fiscal year EBITDA guidance by 25% and initiated a $20 million write-down linked to excess pandemic-era inventories. Investors responded sharply to the news, pushing the stock price from $71.44 down to $57.86 in a single session.

This market reaction triggered a securities class action lawsuit alleging that executives failed to disclose material information to shareholders. While the company sought to have the litigation dismissed, a presiding court recently allowed the case to move forward. The investigation by Kahn Swick & Foti seeks to determine if officers and directors violated state or federal laws, potentially opening a path for shareholders to address investment losses.