New Orleans City Employees' Retirement System filed a class-action lawsuit against Mattel Inc. and PricewaterhouseCoopers, alleging the defendants misrepresented the toymaker's financial condition, its internal controls over financial reporting and PwC's conflicts of interest as Mattel's auditor.
The lawsuit, filed Jan. 31 in U.S. District Court in Los Angeles by the $382 million pension fund, alleges the company misled investors by understating its income tax expenses by $109 million in the third quarter of 2017 and then working with PwC to conceal the misstatement by manipulating the company's accounting.
In October 2019, Mattel canceled a $250 million debt offering after disclosing it was made aware of an anonymous whistleblower letter, and then announced it would be restating its financial reports for the third quarter of 2017 and year-end 2017.
The pension fund is seeking damages on behalf of a potential class for its purchase of Mattel stock at artificially inflated prices and the subsequent drop in stock price following Mattel's October 2019 announcement.
A spokeswoman for Mattell declined comment.
Michael D. Blatchley, partner at Bernstein Litowitz Berger & Grossmann, attorney for the plaintiff, could not be immediately reached for comment.