CPSC and Carb2 May be why Lumber Liquidators Holdings Inc (NYSE:LL) has fallen

September 21, 2015, 12:15 pm ET, BY Thomas H. Kee Jr- Editor, Stock Traders Daily| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

There is a rumor circulating that Lumber Liquidators Holdings Inc (NYSE:LL) may have received a two week notice from the CPSC.  Lumber Liquidators is currently under investigation by the CPSC for a possible recall of its non Carb2 compliant laminate flooring and reasonably the timeline suggests that the CPSC should also be nearing a conclusion.

It has been my ascertation, given the testing procedures CPSC would conduct, which are similar to the testing procedures that Lumber Liquidators itself conducted, that there would not be a recall.

Clearly, I cannot be sure about this and the risks run high that a recall could actually occur.

Another possibility is that California may be in the final stages of imposing a fine or settling disputes arising from the sale of non-qualified and non compliant mislabeled laminate flooring in the state of California.

To this, my ascertation has been that fines will not be imposed, but replacement costs or monetary compensation to customers would be required.  Again, I cannot be sure, the risks are definitely high, and the general timeline for making a decision suggests that a formal decision may be reached imminently, if it has not been reached already.

The action in shares of Lumber Liquidators over the past few trading sessions has been unusual given the progression higher that had been taking place.  The stock reached $17.10 last Thursday and it was trading below $15.00 when I wrote this, suggesting a decline of more than 12% in just two trading sessions.

On the heels of this decline Stock Traders Daily recommended that clients sell their positions in Lumber Liquidators and we have removed our rating.  From here, we will wait for additional news to surface and when it does, depending on the stock's reaction and the impact of that associated news, we may or may not take additional positions in the stock.

Stock Traders Daily intends to alert clients in real time once the news surfaces.

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