Napco Security Technologies, Inc. (NSSC) Investigation

Napco Security Technologies, Inc. saw its shares tumble after the company reported a sharp decline in second-quarter 2025 earnings, revealing problems with its distribution network. The news reignited concerns about the company's sales practices, previously raised by a research report last September.

On February 3, 2025, Napco reported a 25% drop in equipment sales compared to the same quarter the previous year. The company attributed the decline to "reduced sales to two of our larger distributors," with one distributor citing efforts to reduce inventory. This disclosure sent Napco shares spiraling downward, collapsing $9.77, or 26%, in a single day. The company also reported a 19% decrease in operating income and a 17% decrease in net income for the quarter.

This recent downturn follows a critical report issued by Fuzzy Panda Research on September 5, 2024. The report, titled “Napco Security Technologies (NSSC) – Former Employees Allege Accounting Fraud + Lapping One-Time Sales Boosts,” questioned Napco’s sales practices. Fuzzy Panda alleged that Napco masked slowing equipment sales by adding ADI Global as a distributor, creating a one-time sales boost through fiscal year 2024. Following the report's release, Napco shares fell $8.89, a 20% drop.

These events have prompted prominent shareholder rights firm Hagens Berman to commence an investigation into possible violations of the securities laws.

FREQUENTLY ASKED QUESTIONS ABOUT THE CASE

What is the NSSC investigation about?

We are investigating whether Napco may have improperly channel-stuffed certain of its distributors.

WHAT SHOULD I DO?

I worked at NSSC. What should I do?

If you were an employee of NSSC, you may have valuable information that could be relevant to the investigation. Hagens Berman is one of the nation’s top whistleblower law firms, and has successfully represented many individuals who come forward with information regarding corporate malfeasance. Under the new SEC Whistleblower program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, contact Reed Kathrein at 844-916-0895 or [email protected].

There are multiple law firms participating, do I need to contact all of them?

No, you do not need to contact all participating law firms. Generally, class-action investigations and lawsuits are consolidated into a single case to streamline the legal process, and attorneys from only a few law firms are selected to serve in a leadership role on the consolidated case. Hagens Berman has a proven track record of being appointed to leadership roles in complex, multidistrict litigation regarding investor fraud and other consumer rights issues, and your claim will be handled by attorneys who have helped secure approximately $325 billion in class-action settlements on behalf of individuals who have suffered due to corporate malfeasance and the wrongdoing of other powerful institutions.

AM I ELIGIBLE?

What is the threshold amount to be eligible? What are “substantial” losses?

The threshold amount and the definition of "substantial" losses may vary depending on a number of factors specific to the case, including the size of the company, market cap, shares outstanding and who holds them and the damages alleged by the fraud. In general, to be eligible to participate in a class-action lawsuit, you must be able to demonstrate that you suffered financial losses as a result of the alleged wrongdoing and that your losses meet the criteria set by the court or law firm. Fill out the form and submit your losses.

CAN I PARTICIPATE?

Am I affected? What do I need to do to participate?

If you were an investor in NSSC, you may be affected and eligible to participate in the case. To determine your eligibility and potential involvement, fill out the form and submit your losses.

Can any NSSC investor participate?

In most class-action investigations and cases, any investor who meets the eligibility criteria, including purchasing the shares during the relevant period, can participate, regardless of the size of their investment. Fill out the form to find out your rights.

I bought on a non-U.S. Exchange. Can I participate?

No. This investigation only covers shares bought on a U.S. exchange, i.e. NASDAQ or NYSE. Fill out the form to find out your rights.

Am I included if I still hold my shares, or do I need to sell to participate?

Participation is based on purchasing shares during the relevant period, rather than your current holdings. Accordingly, you do not need to sell to participate. Fill out the form to find out your rights.