TCP Employee Files Business Misconduct Complaint against Company CEO

A Technical Consumer Products, Inc (TCP) employee has filed a lawsuit against company CEO Ellis Yan for alleged business misconduct and aggressive behavior towards employees in Cuyahoga County Common Pleas Court, Ohio, U.S., according to several Cleveland media reports..

In the complaint, attorney Laura Hauser, who worked as a general counsel at TCP, accused Yan of unethical and reckless business practices, and for being abusive towards employees, reported Cleveland.com.

Hauser, who claims to have been physically assaulted by Yan in October 2013, is seeking US $25,000 in compensation from the company CEO for causing her emotional distress, financial harm, and for threatening her with physical harm.

In the lawsuit, she claimed Yan had ordered its Chinese factory to mislabel 40,000 LED bulbs with the Underwriter’s Lab certification label. The bulbs later failed to pass compliance and UL tests. The UL label is a very important safety standard label in many industries, and is a product quality indicator.

Yan also asked the company’s compliance team to direct their focus away from the UL certification issue to “numbers.” He also threatened to fire the company’s compliance team if they did not release the mislabeled products onto the market, said Hauser.

Hauser sent her concerns about product safety to the Audit Committee of TCP’s Board of Directors, which hired an attorney from Jones Day firm to help with the investigation.

In the lawsuit, The Audit Committee findings included Yan withheld financial information from TCP’s CFO; failed to follow proper processes for commercial price changes; had not consulted with executive managers; circumvented UL supplier certification processes; was disrespectful to employees; and had imposed unrealistic performance demands on employees.

The Audit Committee concluded that Yan must change "promptly and substantially," and presented the report to Yan at a meeting on Feb. 3.

Hauser received a call from Yan later that night, and was chastised for her role in the audit. During the phone conversation, Yan threatened her with the remark: “You will be sorry,” said Hauser.

She also recalled The Home Depot’s lighting division buyer, Jeff Epstein, demand of $4 million from TCP for failing to remit funds from its utility rebate programs in September 2014.

At first, TCP insisted that it had properly executed its rebate program, but Yan later reluctantly gave into Home Depot’s demands, and agreed to repurchase the markdown of TCP products from Home Depot for $1.8 million, “"without any rational justification," said Hauser.

TCPI has responded to the case saying it is “currently in the process of evaluating these claims and intends to vigorously defend itself.”

Since the lawsuit, the company’s stock value has plummeted by 57.25% to $2.75 per share.

Several law firms including Kahn Swick & Foti, LLC and Law Firm pf Levi & Korsinsky have launched investigations of possible violations of state or federal securities laws, such as violations of the Sarbanes-Oxley Act (SOX) as claimed in the lawsuit.

TCPI was previously a privately owned family business before it became listed on the New York Stock Exchange (NYSE) last June. Yan and his family still have a 70% stake in the company. Its shares valued $11 during its initial offering, which helped the company raise more than $ 73 million on the bourse.

References:

1.      TCPI is Evaluating Claims Filed on February 26th, 2015

2.      Lawyer for TCP files lawsuit against CEO Ellis Yan, company

3.      Lighting company CEO Ellis Yan accused in lawsuit of reckless business practices, bullying employees

4.      TCPI Investigation Initiated by Former Lousiana Attorney General: Kahn Swick & Foti, LLC Investigates TCP International Holdings Ltd. Following Allegations of Violations of Federal Law

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