Lumber Liquidators will pay a fine in the amount of $19.1 million and restitution of $13.9 million, of which up to $6.1 million will be sent to the SEC in disgorgement and prejudgment interests. The penalty will resolve the company's charge of securities fraud in connection to its sourcing of Chinese laminate flooring.
The Department of Justice stated charges against the company are deferred and will be dismissed after three years on condition the company meets certain obligation, many of which Lumber Liquidators says in its press release "has already implemented."
"Lumber Liquidators has undergone a significant transformation in recent years and today is a new company led by an entirely new management team that is committed to our customers, compliance, transparency, and accountability across our organization," the company said.
Why It's Important
Analysts at Stifel said Lumber Liquidators' appearance in a "60 Minutes" segment back in 2015 was the focus of the investigation. Since then, the company has settled multiple legal items, including the multidistrict litigation, securities class action, California Air Resources Board, the Lacey Act and others.
As such, Tuesday's settlement is "positive as it removes a significant uncertainty moving forward," said analysts at Stifel.
Settling with government bodies also allows Lumber Liquidators to better "focus on our customers, great product lines, and our strategic vision," the company's press release said.
The stock traded around $11.12 per share at time of publication, down about 3 percent for the day.
The '60 Minutes' Effect On Stocks
Loop Capital Shelves Lumber Liquidators, Says Street Estimates Could Be Overly Optimistic
Photo credit: Dwight Burdette (Own work), via Wikimedia Commons
Latest Ratings for LL
|Jan 2019||Loop Capital||Downgrades||Buy||Hold|
|Oct 2018||Credit Suisse||Maintains||Neutral||Neutral|
|Oct 2018||Morgan Stanley||Maintains||Equal-Weight||Equal-Weight|
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