NAPCO Investors Face Critical Deadline Amid Allegations of Financial Misstatements: What to Know Before June 24

The legal storm surrounding NAPCO Security Technologies (NASDAQ: NSSC) has intensified, with Rosen Law Firm issuing urgent calls for shareholders to act before a pivotal June 24 deadline. The firm’s ongoing class action lawsuit accuses NAPCO of misleading investors through exaggerated financial projections and undisclosed operational flaws, culminating in a catastrophic 26.6% stock plunge in February 2025. For investors holding NSSC shares during the period from February 2024 to February 2025, understanding the risks and rights outlined in this case is now critical.

The Allegations: A Pattern of Misstatements and Hidden Risks

At the heart of the lawsuit are claims that NAPCO executives made false assurances about the company’s financial health and future growth. Key allegations include:
- Overstated Revenue Forecasts: NAPCO allegedly downplayed risks from seasonal demand fluctuations and macroeconomic challenges while touting “reliable” revenue growth projections.
- Inventory and COGS Misstatements: Errors in unaudited financial statements from September 2022 onward allegedly inflated gross profits by overstating inventory and underreporting the cost of goods sold (COGS).
- Operational Weaknesses: The February 2025 revelation of a steep sales decline—driven by distributor inventory cuts and delays—exposed the truth, triggering the stock collapse.

The Financial Fallout

The February 3, 2025, earnings report sent NSSC shares into a tailspin, with the stock closing down nearly 27% in a single day. This drop erased months of gains and underscored the stark disconnect between NAPCO’s public narrative and its underlying performance.

Legal Implications and Investor Action Steps

Rosen Law Firm’s class action seeks to recover losses for investors who purchased NSSC during the Class Period. Key deadlines and considerations:
- Lead Plaintiff Deadline: Shareholders must file motions by June 24, 2025, to serve as lead plaintiff. While not required to participate, this role ensures representation in settlement negotiations.
- Case Status: The lawsuit has not yet been certified as a class action, meaning investors must retain counsel to secure standing.
- Cost Structure: Rosen Law Firm operates on a contingency basis, meaning plaintiffs pay no upfront fees. The firm has recovered over $1 billion for shareholders in prior cases, including a $438 million settlement in 2019.

What’s at Stake for Investors?

The case hinges on proving that NAPCO’s misstatements caused material harm to investors. If successful, eligible shareholders could recover losses tied to the stock’s February collapse. Crucially, the alleged financial inaccuracies—particularly the COGS and inventory errors—suggest systemic issues in NAPCO’s internal controls, raising broader concerns about its governance and future viability.

Conclusion: A Crossroads for NAPCO Investors

With the June 24 deadline looming, NSSC investors face a clear choice: act to preserve their rights or risk losing eligibility for compensation. The 26.6% stock plunge alone underscores the severity of the allegations, while Rosen’s track record adds credibility to the firm’s claims.

For context, consider the following:
- Market Performance: Between February 2024 and February 2025, NSSC underperformed the S&P 500 by approximately 22 percentage points during the Class Period.
- Operational Decline: NAPCO’s Q2 2025 sales dropped 14% year-over-year, with CEO Richard Soloway citing distributor issues as a key culprit—a problem he had previously downplayed.

The legal battle is far from over, but one thing is clear: investors who held NSSC during this volatile period must act swiftly to safeguard their interests. With Rosen Law Firm’s contingency model reducing barriers to entry, the path forward is straightforward—but time-sensitive. The next 60 days will determine whether affected shareholders can reclaim losses or remain sidelined as “absent class members” in what could be a landmark securities case.