Stock trading for Lumber Liquidators shares was stopped Monday after a “60 Minutes” report on CBS News said the firm used laminate flooring from China that didn't meet tests of carcinogen levels required in California.
The Toano-based firm, which has a large presence in Richmond, saw its shares drop 24.8 percent Monday before trading was halted.
“60 Minutes” said that two laboratory tests of Lumber Liquidators laminate flooring samples showed that samples made by the firm in the United States passed the California standard for formaldehyde, but every one of the samples the firm imported from China and was selling failed. Formaldehyde can cause cancer.
Company founder and chairman Tom Sullivan told the news magazine program that his firm isn't required by law to test its finished products. He said his firm was the victim of a plot by securities traders to short his company’s stock.
Lumber Liquidators has disclosed in a regulatory filing that the U.S. Justice Department may seek criminal charges against the firm for possibly not complying with a ban on illegally sourced products.
Lumber Liquidators says it's upgraded a testing lab near Richmond to perform advanced testing for formaldehyde.