U.S. Senator Calls for Federal Probe of Lumber Liquidators

Politics Reuters

U.S. Senator Bill Nelson asked three federal agencies to investigate hardwood flooring retailer Lumber Liquidators Holdings Inc after a report on "60 Minutes" that some of its wood flooring products had dangerous levels of formaldehyde.

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The company's shares fell as much as 12 percent to a two-and-a-half-year low on Wednesday.

Nelson, the ranking Democrat on the Senate Committee on Commerce, Science and Transportation Committee, sent a letter asking the Consumer Product Safety Commission, the Centers for Disease Control and Prevention, and the Federal Trade Commission to test formaldehyde levels in Lumber Liquidators' laminate flooring materials imported from China.

He also asked that they determine whether the company had made false marketing claims.

Lumber Liquidators could not be immediately reached for comment.

A recorded message on its investor relations line said the company would not take calls until after March 12, when it would hold a conference call to provide a business update.

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Lumber Liquidators said on Monday that the CBS news program "60 Minutes" had used an improper test in its report and its suppliers in China had confirmed that the product complied with all regulations.

Up to Tuesday's close, Lumber Liquidators' stock had fallen about 41 percent since Feb. 24, a day before the company said it might face criminal charges under a law aimed at curbing illegal harvest of tropical hardwoods.

Lumber Liquidators' options were unusually active on Wednesday with contract volume of 42,000, more than three times normal, as of 1:30 p.m. ET, according to Trade Alert data.

Puts, used to place bearish bets on a stock, were especially active, making up seven of the 10 busiest options on the company.

Lumber Liquidators shares were down 11 percent at $36.17 in afternoon trading on the New York Stock Exchange.

(By Jim Finkle and Sagarika Jaisinghani; Additional reporting by Saqib Iqbal Ahmed and Ankit Ajmera; Editing by Kirti Pandey)