For every action, there’s always a reaction. This week, no one can attest to such a phrase better than Lumber Liquidators. In just two days, the American specialty flooring retailer’s corporate sector has been flipped upside down.
On Thursday, federal authorities from both the Department of Homeland Security and Immigration and Customs’ Enforcement, in corroboration with the US Fish and Wildlife and Department of Justice completed search warrants at the Lumber Liquidators’ Toano, VA headquarters. The warrants were motivated by potential violations of the Lacey Act of 1900. Amended in 2008, the Lacey Act prohibits the trade of illegal wood products. In a nutshell, the hardwood flooring retailer has been accused of selling stolen wood.
Such violations serve a hindrance to the United States’ forest products’ industry, which rakes in billions of dollars in government revenue annually. The critical industry serves as a vast global contributor for the production of a multitude of essential products such as pulp, paper, and tissue.
Alexander von Bismarck, Executive Director of the Environmental Investigation Agency, put things into perspective explaining the crux of the problem in correlation with Lumber Liquidators’ alleged violations:
“We are encouraged that the US government appears to be responding to the catastrophic levels of illegal logging around the world and continues to lead the international effort to stop the trade in stolen wood. The law has already been credited with effectively transforming the marketplace, curbing associated illegal activity around the world and helping to combat climate change. Companies need to ensure the products they sell are legal.”
On Friday, Lumber Liquidators released a statement disclosing the execution of the search warrants. As a result the company’s stock abruptly took a staggering nose-dive. By mid-day trading, the stock price had declined $10.38, which equates to a 9.2% drop, leaving shares at $102.58.
Lumber Liquidators has not provided an admission or denial to the allegations, nor have they provided any further comments.
Image via Wikimedia Commons