Lowey Dannenberg reminds investors that they have until February 24, 2020 to file lead plaintiff applications in a securities class action lawsuit against Mattel, Inc. (“Mattel”) if they purchased the Company’s shares between October 26, 2017 and August 8, 2019, inclusive (the “Class Period”). This action is pending in the United States District Court for the Central District of California.
The lawsuit centers on misstatements in Mattel’s financial results and disclosures to investors. On August 8, 2019, Mattel acknowledged that a whistleblower had sent a letter to PricewaterhouseCoopers (PwC), Mattel’s outside auditors, alleging accounting errors since 2017 and questioning whether PwC was sufficiently independent. Mattel immediately withdrew a Senior Notes offering it had announced the week before, in light of the company’s ensuing internal investigation. On this news, Mattel stock dropped $2.12 per share (from $13.43 to $11.31 per share) or almost 12% in a single day of trading, wiping out over $730 million in market capitalization.
The Company’s internal investigation concluded that there had been errors in self-reported net losses and tax expenses and acknowledged material weaknesses in its internal controls over financial reporting. Mattel subsequently restated its financial statements for the third and fourth quarters of 2017 and filed an amended 2018 Annual Report on November 12, 2019 to increase its Q3 2017 net loss from $603 million to 713 million.
The Company maintains that the understatement of $109 million losses was due to an oversight in calculating its tax valuation allowance, but the lawsuit alleges fraud. On November 6, 2019, the Wall Street Journal reported that Mattel’s former director of tax accounting said that the accounting “error” was intentionally hidden by the upper echelons of the Company’s financial executives. The lawsuit claims that when the true details entered the market on August 8, 2019 via the whistleblower complaint, investors suffered damages.
Investors who acquired Mattel stock during the Class Period may have incurred such losses and may be eligible to apply to be lead plaintiff until February 24, 2020. If you wish to join the litigation, please contact Barbara Hart, Lowey Dannenberg at 914-733-7227.