Mohawk Industries accused of fabricating sales, other violations; stock drops 8%

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Actions de Mohawk Industries Inc. MHK,
+ 8.69%
fell more than 8% in the extended session Monday after the maker of carpets and other flooring products said he was sued for violation of federal securities laws and was the subject of an SEC investigation into the alleged violations. Debt ratings Moody’s Investors Service added to the company’s woes by qualifying the allegations, which include allegations that the company had fabricated sales figures, “negative credit and suggest aggressive business practices and potential governance weaknesses”. ‘business”. For the time being, however, Moody’s has maintained its Mohawk Debt Investment Quality Baa1 ratings “because the company has good liquidity enhanced by recent debt offerings and the allegations will take time to argue,” said Moody’s. Mohawk intends to “defend himself vigorously” in the trial, he said in a brief on Monday. A lawsuit was filed on June 29 against the company and chief executive officer Jeff Lorberbaum, said Mohawk. He alleges that the company fabricated revenues by attempting to deliver to closed customers and by recognizing these attempts as sales, that it overproduced goods to declare higher operating margins and maintained a “large” inventory that ‘She knew she could not sell, and assessed some inventory for incorrect or incorrectly delivered inventory knowing that it was defective and that customers would return it, the company said in the file. Mohawk said that on June 25, he received subpoenas from the US Attorney’s Office for the Northern District of Georgia and the SEC “on matters similar to those raised” by the complaint. The company is cooperating with these authorities, she said in the file. Mohawk shares ended the regular trading day up 8.7%.

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