Lumber Liquidators settles with the SEC and DOJ over Chinese flooring supplier
- Flooring retailer Lumber Liquidators announced settlements with the Securities and Exchange Commission and Department of Justice, paying a total of $33 million.
- The company admitted to filing false statements regarding its use of Chinese-supplied laminate containing formaldehyde.
- Watch Lumber Liquidators trade live.
Lumber Liquidators, one of the largest American retailers of hardwood flooring, announced the resolution of Securities and Exhange Commission and Department of Justice investigations regarding securities violations related to disclosures around the company's sourcing of Chinese laminate flooring. The Virginia-based company agreed to pay a total penalty of $33 million for filing materially false and misleading statements to investors.
In a "60 Minutes" episode that aired in March 2015, the hedge-fund manager Whitney Tilson alleged the company was selling toxic Chinese-made laminate containing formaldehyde, a known cancer-causing chemical, to unsuspecting American families. Tilson also disclosed he shorted the company's stock.
Lumber Liquidators broadly denied the allegations, and said thatit was in compliance with California Air Resources Board regulations, which limit the amount of formaldehyde used in wood products.
"Lumber Liquidators lied to investors and to the public about its compliance with formaldehyde regulations for the flooring it sold - all to protect its stock price," said Brian Benczkowski, Assistant Attorney General of the Justice Department's Criminal Division.
Lumber Liquidators was up 17% this year.
