LOS ANGELES (Legal Newsline) – Toy maker Mattel, Inc. misled investors about its financial situation, according to a federal lawsuit by the New Orleans Employees’ Retirement System.
The lawsuit claims the company understated its income tax expense by $109 million in the third quarter of 2017 and then worked with its auditor, PwC, to manipulate its accounting to conceal this misstatement, according to the suit.
A whistleblower recently revealed that Mattel’s senior accounting executives determined that by concealing the errors in the financial statements “at worst we might get a slap on the wrist from the Securities and Exchange Commission,” the suit said.
Disclosing the mistakes would have been a “kiss of death” and would have required the company to restate financial results, the suit says.
The suit, which seeks class action status, is filed on behalf of purchasers of Mattel common stock between August 2, 2017, and August 8, 2019. PwC, also named in the suit, issued audit opinions that the financial statements accurately reflected the company’s financial position, the suit says.
Mattel later restated its results and reported that the accounting errors were based on advice from PwC, according to the lawsuit.
U.S. District Court for the Central District of California, Western Division case number 2:20-CV-01056