(Bloomberg) – The U.S. Consumer Product Safety Commission endedits probe of LumberLiquidators Holdings Inc. for selling formaldehyde-ladenflooring without issuing a product recall, while calling forcorrective measures that the retailer has largely undertakenalready.

Lumber Liquidators agreed to not sell laminate flooring made inChina — which it stopped offering more than a year ago— and will continue testing the homes of customers whopurchased the product, according to a statement on Thursday. TheCPSC uses recalls to get faulty products off the market, but didn'ttake that step in this case. The regulator's examination of theproduct didn't find unsafe levels of formaldehyde, backing up theresults of a testing program the company instituted last year.

The settlement comes after the CPSC began an investigation inMarch 2015, shortly after the television news program “60 Minutes” reported that Lumber Liquidatorssold Chinese-made flooring with unsafe levels of formaldehyde,which has been linked to cancer. The impetus for the report was alawsuit funded by short sellers, who profit when a stock falls.Another Lumber Liquidators short seller, Whitney Tilson, alsopitched the story idea to “60 Minutes.” He then appeared on theprogram along with the lawyer and environmental advocate whobrought the lawsuit.

'Very pleased'

“This affirms what we did,” Lumber Liquidators Chief Executive Officer JohnPresley said in an interview. “We stopped selling the product,and we tested the product and the tests came back as we expected.We're very pleased with how it turned out.”

The allegations by “60 Minutes” were devastating. Shoppers fled,hurting sales and plunging the company into losses. The previousCEO and chief financial officer exited, and the company was sued by customers across thecountry.

The stock has fallen more than 70% since the “60 Minutes”report. Shares of Toano, Virginia-based Lumber Liquidators rose0.7% in New York on Thursday.

Resolving the CPSC inquiry is the third hurdle that LumberLiquidators has overcome in its bid to revive its business. Earlierthis year, it won a tentative ruling dismissing theshort-seller-funded lawsuit. It also agreed to pay $2.5 million tothe California AirResources Board, one of the state's regulators, to end aninquiry into its Chinese laminate flooring products. There was noformal finding of violation or any admission of wrongdoing by thecompany.

Home tests

The company began a testing program after the “60 Minutes”report and has so far analyzed the air of 17,000 homes. Of those,1,300 had elevated levels of formaldehyde and had flooring tested.None of the floors tested above the CPSC's safety guidelines. Thesource of formaldehyde in the home can vary because it's used inseveral products, including carpet, cigarettes and cleaningproducts. The company hasn't removed or replaced any floors relatedthe testing program.

Through testing, the government determined that eye, nose andthroat irritation could occur with the higher-formaldehyde flooringsamples in certain home environments, the statement said.

Even with the CPSC victory, the company still has a long way togo. In the first quarter, sales fell 10% — the fourth straightdrop — and its net loss was much wider than expected. Presley,a longtime board member who became CEO in November, is also in abattle with leukemia. He is undergoing treatment and says he's onlymissed a few days of work.

“I hope these test results and this affirmation of our testingprogram goes a long way to settle in the consumer's mind the issueof formaldehyde in our product,” Presley said. “Finally, the fullstory about formaldehyde and our products is being told.”

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