Mattel Agrees To Pay $3.5M To Settle SEC Charges Over Financial Misstatements

The Securities and Exchange Commission said Mattel Inc MAT has agreed to pay $3.5 million to settle charges relating to misstatements in its third and fourth-quarter 2017 financial statements.
According to the SEC’s order, the toymaker understated the tax-related valuation allowance for Q3 FY17 by $109 million and overstated the tax expense for Q4 FY17 by the same amount.
As a result, Mattel’s Q3 and Q4 FY17 net loss and net loss per share were understated by 15% and overstated by 63%, respectively.
Also, the SEC’s order found that, at the time, Mattel had no internal control specifically related to calculating a valuation allowance.
Until Mattel’s November 2019 restatement, the $109 million tax expense error remained uncorrected, and the lack of internal control for financial reporting related to the error remained undisclosed.
Neither Mattel’s CEO nor audit committee was informed of the $109 million error.
Without admitting or denying these findings, Mattel agreed to a cease-and-desist order and to pay a $3.5 million civil penalty.
Separately, the SEC has initiated litigation against Joshua Abrahams, a former audit partner at PricewaterhouseCoopers LLP, or PwC, to determine whether he engaged in improper professional conduct and violated auditor independence rules.
The order against Abrahams alleges that he violated numerous professional standards in the Q3 FY17 interim review and the 2017 annual audit of Mattel’s financial statements.
The order further alleged that Abrahams failed to maintain independence by providing prohibited human resource advice to Mattel.
Also Read: VeeFriends Lands Partnership With Macy's And Toys "R" Us: How You Can Get NFT Physical Collectibles
Price Action: MAT shares are trading lower by 0.15% at $19.79 in premarket on the last check Monday.
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