Toy maker Mattel agrees to pay $3.5 million to settle SEC charges

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WASHINGTON, Oct 21 (Reuters) – California-based toymaker Mattel Inc (MAT.O) agreed to pay $3.5 million to settle U.S. Securities and Exchange Commission (SEC) charges over financial misstatements in 2017, the agency said Friday.

Mattel, which makes Barbie and Fisher-Price toys, incorrectly reported its losses in the third and fourth quarters of 2017 due to tax reporting errors, the SEC said. The issue was not corrected until November 2019 and the lack of internal control over financial reporting related to the error was not disclosed. The company’s managing director and audit committee were not informed of the error.

A spokesperson for Mattel, who neither admitted nor denied the SEC’s findings, said the company was pleased to have the case behind it. Mattel shares fell 1% in extended trade on Friday.

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The SEC said it was separately taking legal action against a former audit partner of PricewaterhouseCoopers LLP to determine whether he engaged in improper professional conduct and violated auditor independence rules.

Auditor Joshua Abrahams did not verify that the $109 million uncorrected error was documented, even though he was aware of it, according to the SEC. He further failed to maintain the independence of the auditors by advising the then CFO of Mattel on who should be selected for a leadership position in the company.

A PWC spokesperson declined to comment.

Thomas Zaccaro, an attorney for Abrahams, called the charges “baseless” and said “he will vigorously contest these baseless allegations.”

The matter will proceed to a public hearing before the Commission, the SEC said.

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Reporting by Chris Prentice in Washington Editing by Aurora Ellis and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

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