By Denny Jacob


The Securities and Exchange Commission said Friday that toy maker Mattel Inc. agreed to pay $3.5 million to settle charges related to misstatements for financial statements from 2017.

The regulator said Mattel understated the tax-related valuation allowance for the third quarter of 2017 by $109 million and overstated the tax expense for the fourth quarter of 2017 by the same amount. Mattel's third and fourth quarter net loss and loss per share were understated by 15% and overstated by 63%, respectively, as a result, the SEC said.

The SEC said its order found that, at the time, Mattel had no internal control specifically related to calculating a valuation allowance.

Mattel agreed to a cease-and-desist order as well as the monetary penalty without admitting or denying the findings, the SEC said.

The regulator also said it is also initiating litigation against Joshua Abrahams, a former audit partner at PricewaterhouseCoopers LLP, to determine whether he engaged in improper professional conduct and violated auditor independence rules.

The SEC said its separate order against Mr. Abrahams alleges that he violated numerous professional standards in the third quarter's interim review and the 2017 annual audit of the toy maker's financial statements. The regulator said its order further alleges that Mr. Abrahams failed to maintain independence by providing prohibited human resource advice to Mattel, including hiring suggestions as well as who shouldn't be hired.


Write to Denny Jacob at denny.jacob@wsj.com


(END) Dow Jones Newswires

10-21-22 1703ET