The scrutiny follows Cardinal's August 11 financial disclosure, which revealed a sharp contraction in profit margins despite record-setting revenue. While the company raised $318 million in a June offering by highlighting an $866 million project backlog, its second-quarter earnings painted a different picture. Adjusted earnings per share plummeted 51% to $0.26, missing analyst expectations of $0.47. Management blamed the shortfall on rising labor costs, subcontractor expenses, and a heavy reliance on rented equipment—factors that now form the core of the legal inquiry.

Reed Kathrein, the Hagens Berman partner leading the investigation, aims to determine if the firm failed to disclose these mounting pressures while simultaneously pitching its growth prospects to the market. The firm is currently soliciting information from investors who suffered losses following the August 11 report, as well as potential whistleblowers familiar with the company's internal practices.