Lumber Liquidators draws senator's ire

lumber liquidators ytd stock
Lumber Liquidators stock has plunged 44% this year.

A top U.S. senator is calling for a federal investigation into Lumber Liquidators.

Senator Bill Nelson wants to know if the company broke federal law about false marketing claims by selling laminate flooring. A "60 Minutes" piece on Sunday revealed the flooring contains unsafe levels of the cancer-causing chemical formaldehyde.

The senator from Florida wants the agencies to test samples of the flooring, which is made in China.

Lumber Liquidators (LL) sells its products nationwide, including at 352 stores it owns in North America.

Nelson, the top Democrat on the Senate's Commerce Committee, sent his request Thursday to the Consumer Product Safety Commission, the Centers for Disease Control and Prevention, and the Federal Trade Commission.

Lumber Liquidators said Wednesday that it "shares Senator Bill Nelson's desire for consumer safety" and had been working with the government on safety regulations "over the past few years."

"We are committed to safety and will continue to deliver the best quality product at the best price to our customers," the company said.

The report on CBS' "60 Minutes" by CNN's Anderson Cooper cited lab tests it commissioned and those conducted by a consumer safety group.

Some pieces had six to seven times the level of formaldehyde allowed under California law, according to environmental attorney Richard Drury, who was interviewed by "60 Minutes." Others had 20 times the limit.

"60 Minutes" reported that the wood was labeled as compliant with California regulations but, in fact, was not. California rules are even more stringent than federal law.

Nelson wants to know if the incorrect labeling means the company was responsible for an "unfair or deceptive trade practice."

Trading of the stock was suspended Monday morning. After the company issued a statement and trading began, it tumbled 25%, and combined with major losses the previous week, is down 44% this year.

Lumber Liquidators said in response to the "60 Minutes" report that it is "a leader in safety."

"We comply with applicable regulations regarding our products, including California standards for formaldehyde emissions for composite wood products -- the most stringent rules in the country," the company said.

Lumber Liquidators pointed out that some hedge funds have bet against the company, and accused those investors of greed.

CNNMoney Sponsors