Mattel Executives Under Investigation for Possible Breaches of Fiduciary Duty

On August 1, 2019, Mattel announced that it would be conducting a $250 million note offering. On August 8, 2019, Mattel announced that its outside auditor had received a whistleblower letter alleging certain improprieties in the company’s accounting practices and questioning the independence of the company’s outside auditor, resulting in the sudden termination of the note offering. On this news, the price of Mattel shares fell $2.12, or 15.8%, to close at $11.31 per share on August 9, 2019, severely damaging shareholder value.

On October 29, 2019, Mattel announced that it had concluded its investigation into the whistleblower’s claims, and that the company’s Chief Financial Officer, Joseph J. Euteneuer, would “transition” from the company. According to the company, the investigation found, among other things, “errors” in Mattel’s publicly filed financial statements for the last two quarters of 2017. The investigation determined that income tax expense was understated in the third quarter of 2017, and overstated in the fourth quarter of 2017. The investigation also determined that Mattel had certain material weaknesses in its internal control over financial reporting, and that a restatement and “remedial actions” were necessary. On December 24, 2019, a class action lawsuit alleging securities fraud claims was filed against the company in the U.S. District Court for the Central District of California.

The Schubert Firm is investigating potential derivative claims based on harm the company has suffered as a result of potential breaches of fiduciary duty by the company’s officers and directors.

If you currently own Mattel stock and wish to obtain additional information—or would like to participate in a potential shareholder derivative action—please complete the form below for a free legal consultation.