Mattel is being sued by shareholders for allegedly delaying contacting federal regulators about possible toy defects. According to shareholders, Mattel regularly delayed notifying the CPSC about possible dangers, which in turn breaches the company’s fiduciary duties to the shareholders by ignoring consumer protection laws and putting the stock at risk.
Investors are accusing Mattel’s executives and Board of Directors of delaying the reporting until they sold their own stocks, knowing that the bad news would send stock prices plummeting once the large-scale recalls went public.
Mattel isn’t the only major toy company to have recalled toys this year. Click here for a list of hundreds of toy products being recalled.
Editor’s Note: I find it interesting that a major US toy company can import products that defy federal lead regulations, and continue selling products with small magnets that are known to be deadly if swallowed, yet the lawsuit against them has to do with stock prices instead of endangering the health of America’s children. What is wrong with this country?