NEW YORK (TheStreet) -- Shares of Lumber Liquidators  (LL) - Get Report fell 5.43% to $28.89 in morning trading Monday after the announcement of a lawsuit against the company stemming from allegations of insider trading.

The Shareholders Foundation announced Monday morning that a current long-term investor in the hardwood flooring retailer has filed a lawsuit against nine officers of the company.

The plaintiff alleges that Lumber Liquidators' founder, Tom Sullivan, and its CEO, Robert M. Lynch, together sold $19 million in stock at inflated prices before the company's issues with imports of some Chinese wood products became public.

The suit claims that Sullivan and Lynch allegedly engaged in insider trading by selling shares in 2013 with the knowledge that the company could face criminal charges under the Lacey Act for importing Chinese wood products made from illegally harvested trees.

At least 10 consumers who bought some Lumber Liquidators' Chinese-made laminate flooring products filed separate lawsuits against the company tied to reports that some of said products exceeded acceptable formaldehyde levels. CBS' 60 Minutes reported on the formaldehyde levels on March 1.

Insight from TheStreet's Research Team:

Timothy Collins commented on Lumber Liquidators in a recent post on RealMoney.com. Here is what Collins had to say about the stock:

Yesterday on Real Money Pro, I discussed Lumber Liquidatorsand its failure to really put together a solid response from management as of yet. It finally seems a response is forthcoming on Thursday, which has the stock being bought this morning up nearly 13%. I'm not so sure this is not simply short covering or hedging, but no matter, the price today is higher than it was yesterday, for whatever reason.

A very small debate did ensue in the comments section about where to buy this one, with a few fundamental and technical arguments put forth. Granted, the buy argument wasn't a haphazard thesis overall, as it put together both recent fundamental data along with chart patterns, but the issue from my view is that LL is a haphazard stock.

Whether it is a falling knife or a parabolic short squeeze, certain stocks at specific times will lose all touch with recent reality. They begin to move in such a way that it renders traditional valuation methods, or even reality itself, as moot. For instance, how can one rely on the recent fundamentals from LL? I don't believe you can.

If there is any truth to the 60 Minutes report, then the cash on the books will be gone before an investor can even hit the sell button. The lawsuits will pile up quickly and business will cease for the most part in the stores. Even if the story isn't true, one has to expect the company will guide down expectations on Thursday for revenue and earnings, thus changing even the most recent fundamentals. Dozens of lawsuits have been filed, so expect the company to have a rise in legal costs, which will sap some of that cash. Furthermore, with the sheer massive volume in the stock, how can one rely on recent institutional ownership data? Simply put: You cannot.

- Timothy Collins, 'Lumber Liquidators: An Unreality Show' originally published 3/10/2015 on RealMoney.com.

Want more information like this from Timothy Collins BEFORE your stock moves? Learn more about RealMoney.com now.

Separately, TheStreet Ratings team rates LUMBER LIQUIDATORS HLDGS INC as a "hold" with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate LUMBER LIQUIDATORS HLDGS INC (LL) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."

You can view the full analysis from the report here: LL Ratings Report