Investigation by Former Louisiana Attorney General into NAPCO Security Technologies Raises Concerns

Investigation of NAPCO Security Technologies

On May 9, 2025, Charles C. Foti, Jr., the former Attorney General of Louisiana and now a partner at Kahn Swick & Foti, LLC (KSF), announced an ongoing investigation into NAPCO Security Technologies, Inc. (NASDAQ: NSSC). This investigation comes in light of serious concerns regarding financial disclosures made by the company, raising questions about potential misstatements that could affect shareholders.

Background of the Investigation

The roots of this investigation can be traced back to August 18, 2023, when NAPCO Security revealed significant weaknesses in its internal controls over financial reporting. It was reported that these deficiencies made the company's disclosure controls and procedures ineffective for the first three quarters of fiscal 2023. The issues stemmed from inaccuracies in the calculation of cost of goods sold (COGS) and inventory levels, which led to overstated inventory figures and understated COGS. As a consequence, the company overstated gross profit, operating income, and net income.

Following these revelations, on September 1, 2023, NAPCO filed amended quarterly reports that confirmed the extent of the inaccuracies. The adjustments showed that net income had been inaccurately reported by as much as 114.97%, and income per share by 112.5%. Moreover, the firm reported that its operating income and gross profit had also been overstated significantly, with adjustments amounting to 118.02% and 35.59%, respectively.

As these financial missteps came to light, NAPCO faced a securities class action lawsuit, with allegations claiming the company failed to disclose critical information, thereby violating federal securities laws. Recently, a court rejected NAPCO’s attempt to dismiss the lawsuit, allowing it to progress further.

Legal Implications for NAPCO Security

Foti's firm, KSF, is focusing on whether the officers or directors of NAPCO Security breached their fiduciary duties to shareholders or committed any violations of state or federal laws. The ongoing investigation seeks to determine the extent of responsibility that the company’s leadership holds regarding these financial discrepancies and to assess any potential legal repercussions.

Shareholders and concerned individuals are encouraged to come forward with information that may assist KSF in their ongoing investigation. KSF is offering an avenue for long-term holders of NAPCO shares to discuss their legal rights, free of charge. Interested parties can contact KSF by calling 1-833-938-0905 or emailing Managing Partner Lewis Kahn directly.

About Kahn Swick & Foti, LLC

Kahn Swick & Foti, LLC is recognized as one of the country's premier boutique securities litigation law firms. Under the leadership of Charles C. Foti, Jr., KSF has a successful track record in representing a variety of clients, including institutional and retail investors who seek recovery for losses caused by corporate misconduct. With offices spread across key locations, including New York, Chicago, and California, KSF continues to be a formidable presence in the realm of securities litigation.

The firm's commitment to investor protection and corporate accountability remains staunch as they navigate the complicated landscape of securities law. To stay informed on developments in securities cases, parties are encouraged to visit KSF’s website.

As the investigation progresses, stakeholders will be eager to see how the findings will impact NAPCO's future, as well as the potential ramifications for those at the helm of the company during this tumultuous period.