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RICHMOND, Virginia – Lumber Liquidators has agreed to fine $ 33 million to investors who mislead formaldehyde in its laminate flooring products, the SEC said Tuesday.
In early 2015, Lumber Liquidators made false public statements in response to a "60 Minutes" report that showed a video under cover of the company's suppliers saying that they were supplying Lumber Liquidators with products that did not comply with regulatory standards. declared the SEC.
Lumber Liquidators told investors that third-party test results on its flooring had proven its compliance with formaldehyde emission standards. She said she stopped sourcing materials from suppliers unable to meet these standards, the SEC said.
Lumber Liquidators, one of the largest flooring companies in America, knew that its largest Chinese supplier had failed formaldehyde emission testing by a third party, the SEC said. The SEC's order also stated that, while knowing that the people listed in the "60 Minutes" undercover video were factory employees of its suppliers, Lumber Liquidators had falsely told investors that they were not there.
"Pressed by negative publicity, Lumber Liquidators has misled investors about its product testing and regulatory compliance programs," said Marc Berger, director of the SEC's regional office in New York.
The 2015 "60 Minutes" report and subsequent investigations resulted in a drop in sales of Lumber Liquidators. His CEO has also resigned despite criticism. The company finally stopped selling flooring from China.
In 2016, the Centers for Disease Control and Prevention published a report estimating the risk of cancer associated with formaldehyde in certain laminate flooring with 6 to 30 cancer cases per 100,000 people exposed to the floor. He had previously estimated between 2 and 9 cases.
In 2018, Lumber Liquidators paid $ 36 million to settle the class actions brought by customers who purchased the laminate between 2009 and 2015. The company did not admit that wrongdoing had been committed.
"We have cooperated with this investigation and are pleased to have reached a resolution with the US Attorney General's Office, the Department of Justice and the SEC," Chief Executive Dennis Knowles said Tuesday in a statement.
In 2018, Lumber Liquidators announced its intention to move its head office from Toano, Virginia, to Henrico County. The move was scheduled to take place in late 2019, according to a company spokesman. He will settle in the building that once housed the Southern Season grocery store in the Libbie Mill neighborhood of the city.
Jackie Wattles from CNN Business contributed to this story.
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