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Lumber Liquidators stock plummets after 60 Minutes investigation over toxic flooring

By Andrew V. Pestano
60 Minutes correspondent Anderson Cooper found that Lumber Liquidators sold laminate flooring made in China that contained toxic levels of formaldehyde, which may cause asthma and other illnesses. File Photo by UPI /Nell Redmond
60 Minutes correspondent Anderson Cooper found that Lumber Liquidators sold laminate flooring made in China that contained toxic levels of formaldehyde, which may cause asthma and other illnesses. File Photo by UPI /Nell Redmond | License Photo

WASHINGTON, March 2 (UPI) -- Stocks of Lumber Liquidators have plummeted after a 60 Minutes report accused the company of selling Chinese-made laminate flooring containing toxic amounts of formaldehyde, a known carcinogen.

Although the company's domestic-made laminate flooring met health and safety standards, almost of its products made in China did not, according to a report by 60 Minutes on CBS.

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When news of the CBS report surfaced, the company's stock price fell about 43 percent over the last week.

Lumber Liquidators Holdings Inc. had a year-long high of $110.50 per share on March 4, 2014, but dipped to a low of $38.10 per share on Monday.

Trading for Lumber Liquidators was halted for a period on Monday. Its stock was down 24 percent before the stock market opened and down another 21 percent by noon, according to CNBC.

Lumber Liquidators released a statement standing by its record and stating that the company complies with all regulations regarding its products, including California standards for formaldehyde emissions, which are the strictest in the country.

"These attacks are driven by a small group of short-selling investors who are working together for the sole purpose of making money by lowering our stock price," the company said. "They are using any means to try and scare our customers with inaccurate allegations. Their motives and methods are wrong and we will fight these false attacks on all fronts."

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"The average level in Lumber Liquidators products that we found was over six to seven times above the state standard for formaldehyde," Richard Drury, an environmental attorney, said in the 60 Minutes report. "We found some that were close to 20 times above the level that's allowed to be sold."

Dr. Philip Landrigan, an environmental pediatrics and toxic chemical exposure specialist, said long-term exposure to the levels emitted from the laminate flooring can cause chronic respiratory irritation, change in a person's lung function and asthma.

"It's not going to produce symptoms in everyone but children will be the people most likely to show symptoms at that sort of level," he said.

The company has questioned the testing methods by 60 Minutes and said that randomly selected laminate flooring samples from factories the report investigated came back as fully safe and compliant with California standards.

In the report, 60 Minutes bought 31 boxes of Chinese-made laminate flooring from Lumber Liquidators from different states and had them tested.

"We sent the samples for testing at two certified labs. It turns out of the 31 samples of Chinese-made laminate flooring, only one was compliant with formaldehyde emissions standards," Anderson Cooper said in the report. "Some were more than 13 times over the California limit. Both labs told us they had never seen formaldehyde levels that high."

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Short sellers who believe the company is overvalued helped the investigation and are involved in a lawsuit against the company.

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