By Christiana Sciaudone
Investing.com -- Mohawk Industries (NYSE:MHK) dropped 4% after the company disclosed that it has been subpoenaed by the SEC and the U.S. Attorney, ahead of an investor lawsuit filed days later.
The flooring maker received the subpoenas on June 25 from the U.S. Attorney’s Office for the Northern District of Georgia and the U.S. Securities and Exchange Commission on “topics similar” to those in a June 29 investor complaint filed against Mohawk and Chief Executive Officer Jeff Lorberbaum.
The complaint alleges that Mohawk engaged in fabricating revenues by attempting delivery to customers that were closed and recognizing these attempts as sales. The lawsuit also accused the company of reporting higher operating margins and maintaining significant inventory that was not salable. It alleges that the company valued certain inventory improperly or improperly delivered inventory with knowledge that it was defective and customers would return it.
Shares are down 45% in 2020. Mohawk has six buy ratings, two holds and five sells, according to data compiled by Investing.com.
Mohawk said the company intends to vigorously defend itself in the lawsuit, and that it is well-positioned with a strong balance sheet and limited debt after recently issuing more than $1 billion of long term bonds.
On July 1, Robbins LLP, a shareholder rights law firm, said it was investigating the company for fabricating revenue.