Shareholders sue Mattel

Well, you knew this was bound to happen. A Michigan pension fund filed a shareholder suit accusing the El Segundo-based toy company and its board of mishandling product safety procedures that were responsible for three toy recalls. CEO Robert A. Eckert and the board are said to have breached their duty to shareholders by allowing the company to delay the reporting of hazardous toys beyond the 24-hour window required by the feds. Oh, there's also the stock thing - four directors sold $33 million shares from late January to early May and supposedly profited from insider knowledge of coming problems. No response so far from Mattel. Up to now, consumers have filed 10 personal injury cases against Mattel, plus more in state courts. Mattel is a very big company - with access to lots of big-time lawyers - and this too shall pass. But it'll cost them, especially since the company admitted that the recalls were largely the result of its own faulty design and not Chinese manufacturing. From the NYT:

Mattel, the world’s largest toymaker, has found itself in the hot seat since early August, when it announced that it had found lead paint on scores of toys featuring characters like Dora the Explorer. Within weeks, the company announced recalls of more toys that were tainted with lead paint as well as 18 million toys that had hazardous magnets on them. In total, Mattel recalled 21 million toys. Consumers whose children owned the recalled toys have filed lawsuits since the recalls, some seeking class-action status. These suits threaten the value of Mattel stock, and whether Mattel executives broke federal regulations about recalls will be at the heart of those decisions.