April 14, 2015 — Shareholders in Virginia have filed a lawsuit against Lumber Liquidators, accusing them of harming the company by selling laminate floors with dangerous levels of formaldehyde and using illegally harvested wood.
Shareholders accuse executives at Lumber Liquidators of inflating profit margins with a “sourcing initiative” that backfired after tests revealed problems with formaldehyde emissions.
Lumber Liquidators is also facing a shareholder lawsuit accusing executives of “insider trading” by selling $19 million worth of stock just before allegations about formaldehyde went public.
This is not the first time the company’s stock price has taken a hit after accusations of wrongdoing. In 2013, the stock price was at an all-time high of $120 a share. Prices plunged after the Justice Department raided the company’s headquarters in Virginia.
The reason for the raid was never disclosed, but came soon after an environmental group found evidence that Lumber Liquidators was using illegally-harvested wood from Russia’s far east
As of April 2015, the company’s stock is trading at about $30 a share — down by more than 50% after a 60 Minutes investigation accused them of selling Chinese-made laminate floors with toxic levels of formaldehyde that were intentionally mislabeled as compliant with California’s emissions limits.