Mattel Inc. directors and officers knowingly allowed the company to break federal laws by delaying the reporting of defective toys, a shareholder claimed in a lawsuit on behalf of the world's largest toymaker.
The Sterling Heights Police & Fire Retirement System, a pension fund in Michigan, accused directors of failing to ensure that Mattel promptly reported potentially hazardous defects to federal regulators, according to a complaint filed in Delaware Chancery Court today. The reporting delay allowed directors to sell Mattel stock while the price was artificially inflated, the suit said.
"The company's illegal actions have not only placed children in harm's way, they have also exposed Mattel to lawsuits and potential fines and/or regulatory actions from federal authorities," the pension fund said in the suit.
Mattel, the maker of Barbie dolls and Hot Wheels cars, recalled 21 million toys since August because of lead paint or loose magnets that may be swallowed. About 65 percent of Mattel's toys are made in China, the world's biggest exporter of consumer products.