Lumber Liquidators’ chief compliance officer, Ray Cotton, has left the company amid lawsuits and a federal investigation into the formaldehyde content of the company’s Chinese-made laminate flooring.
What’s the Problem?
June 3, 2015 – Lumber Liquidators confirmed Cotton’s departure to the New York Post today after he broke the news on his own LinkedIn page.
The Toano, Virginia-based hardwood flooring retailer is under investigation by the U.S. Justice Department and Consumer Products Safety Commission for problems related to its Chinese-sourced laminate floors. More than 100 class action lawsuits have also been filed against the company.
Cotton had come under fire from hedge fund analyst Whitney Tilson, who shorted Lumber Liquidators’ stock, prompting a CBS News report aired March 1 on “60 Minutes”. Investigators for the program found toxic levels of formaldehyde, a cancer-causing chemical, in samples of the company’s laminate flooring.
Tilson, who publicly questioned Cotton’s lack of experience this week in Seeking Alpha, said he was “stunned” that Lumber Liquidators made no mention of Cotton’s exit.
Because the retailer’s problems are “related to compliance issues … Cotton’s departure is highly material information,” Tilson said. Cotton was hired by Lumber Liquidators in 2013, after holding several posts in the corporate security sector.