Hedge fund manager Whitney Tilson believes that Lumber Liquidators has failed to disclose that its Chief Compliance Officer, Ray Cotton, has left the company.
Tilson, who is short Lumber Liquidators stock, noticed that Cotton had left the hardwood retailer because of changes on his LinkedIn profile page. Tilson shared his discovery on stock blogging site Seeking Alpha.
“Given that Lumber Liquidators is under investigation by numerous state and federal agencies and is facing more than 100 lawsuits, all related to compliance issues (namely, sourcing illegally harvested hardwoods and toxic, formaldehyde-drenched laminate from China), Cotton’s departure is highly material information and the failure to disclose it strikes me as a serious breach of disclosure rules,” Tilson wrote.
We’ve left messages with Lumber Liquidators and Cotton seeking comment.
Cotton, who took on the role of Chief Compliance and Sustainability Officer last fall, would be the latest in a string of execs to leave the Toano, Virginia-based hardwood retailer. Just last month, CEO Robert Lynch “unexpectedly” quit. Then, in April, the company that its CFO, Daniel Terrell, would leave on June 1.
Lumber Liquidators has come under pressure in recent months.
In early March, “60 Minutes” and Anderson Cooper aired a report that found the hardwood retailer appeared to be selling laminate flooring from China with levels of formaldehyde that were higher than that permitted under California law. Numerous health concerns surround high levels of formaldehyde.
Lumber Liquidators said in a statement that “60 Minutes” got it wrong and used an improper testing method.
Tilson, the founder of Kase Capital, was also featured in the “60 Minutes” investigation.
Lumber Liquidators stock closed up 4.41% to end the day at $US22.02 per share.
Shares of Lumber Liquidators have collapsed more than 66% so far this year.
NOW WATCH: Someone figured out the purpose of the extra shoelace hole on your running shoes — and it will blow your mind
Business Insider Emails & Alerts
Site highlights each day to your inbox.