Last year was a bust for Lumber Liquidators Holdings Inc. (NYSE: LL). The company was hit with a revelation that some of its wood products sourced from China contained high levels of formaldehyde and another charge that it was importing wood products made from Mongolian oak, a violation of the Lacey Act, which forbids importing timber products made from materials protected by another country’s laws.
On Monday a U.S. District Court judge approved a plea agreement under which Lumber Liquidators will pay a fine of $10 million for its illegal importation of flooring made of Mongolian oak. The company will also be on probation for five years and will need to appoint an outside auditor to ensure compliance. The fine is the largest in the history of enforcement of the Lacey Act.
Lumber Liquidators pleaded guilty to five federal charges in October, including falsely stating that the oak flooring was made of oak harvested in Germany.
The Mongolian oak is protected as habitat for the last 450 wild Siberian tigers, according to a report at Bloomberg. The tigers prey on deer and boar that eat Mongolian oak acorns.
The plea deal removed a significant overhang for the company, and the stock price reacted strongly positive to the news, rising as much as 17% before dropping back to about 8%. Share had dropped nearly 80% as of Friday’s close.
Volume has reached triple its daily average at around 49 million shares and traded up about 10% at $14.20 at the noon hour. The 52-week range is $10.53 to $69.99 and the consensus price target is $15.63.
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