Whitney Tilson Asks: Has Lumber Liquidators Failed To Disclose That Its CCO Left?

Lumber Liquidators Has Failed To Disclose That Its Chief Compliance Officer Has Left The Company by Whitney Tilson, Seeking Alpha

Summary

• Ray Cotton has, according to his own LinkedIn page, left the company, but the company has failed to disclose this.
• Given that Lumber Liquidators is under investigation by numerous state and federal agencies and is facing more than 100 lawsuits, Cotton’s departure is highly material information.
• The company’s failure to disclose this information strikes me as a serious breach of disclosure rules.
• At best, this is further evidence of a company in chaos and, at worst, one that is trying to hide something.

Yesterday an acquaintance emailed me the link to the LinkedIn page of Ray Cotton, Lumber Liquidators’ Senior Vice President, Chief Compliance and Sustainability Officer, in which he makes it abundantly clear, for four reasons I outline below, that he no longer works for Lumber Liquidators.

I was stunned to see this, not because of his departure – as I documented in my article on March 10th, Lumber Liquidators’ Campaign Of Distraction And Deception, he was completely unqualified for the job and does not appear to be a serious person, so I predicted that he “will not survive this scandal” – but rather because the company hasn’t yet disclosed his departure to investors, analysts, the media and regulators.

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.

Comparing Cotton’s LinkedIn Page Today With His Prior One

Here are screenshots of Cotton’s current LinkedIn page and one I took on March 10^th.:

Current LinkedIn Page

LinkedIn Page on March 10th

When you compare these two pages, it’s clear that Cotton has left Lumber Liquidators, for the following four reasons:

1. In March, he listed Lumber Liquidators as his “Current” employer vs. a “Previous” employer now.
2. In the second line under his name, it used to say “SVP and Chief Compliance Officer at Lumber Liquidators” whereas now it simply says “SVP and CCO”.
3. His location has changed from “Richmond, Virginia” to the “San Francisco Bay Area”.
4. Under the most recent job in the “Experience” section, “SVP and Chief Compliance Officer” of Lumber Liquidators, the dates in March were “September 2014 – Present” whereas today there’s an end date: “September 2014 – May 2015”.

Conclusion

I cannot imagine why Lumber Liquidators has so far failed to disclose Cotton’s departure. At best, this is further evidence of a company in chaos and, at worst, one that is trying to hide something.