Mohawk sinks after disclosing subpoenas from SEC, U.S. attorney

Shares of Mohawk Industries moved lower after the company disclosed that it received subpoenas issued by the U.S. Attorney's Office for the Northern District of Georgia and the Securities and Exchange Commission on topics similar to those raised in an amended class action complaint. The company is cooperating with the authorities. On June 29, an amended class action complaint for violations of federal securities laws was filed against Mohawk and its CEO Jeff Lorberbaum in the Northern District of Georgia, the company said in a SEC filing. The complaint alleges that the company engaged in fabricating revenues by attempting delivery to customers that were closed and recognizing these attempts as sales, overproduced product to report higher operating margins and maintained significant inventory that was not salable and valued certain inventory improperly or improperly delivered inventory with knowledge that it was defective and customers would return it. Mohawk "intends to vigorously defend itself in the lawsuit." Mohawk added, "As we manage through the current economic disruption, Mohawk is well positioned with a strong balance sheet and limited debt. We have recently issued over $1 billion of long term bonds to strengthen our ability to strategically invest and better position Mohawk for the future. Our operations are improving as countries adapt to Covid-19." Shares of Mohawk are down 5% to $72.99 in after-hours trading.