Insider Trading At Mattel (MAT)?

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It looks like insider trading is becoming a big issue with state and city pension funds. North Carolina has suggested charges against the head of Countrywide Financial (CFC)  And now a city pension fund in Michigan says that Mattel (MAT) kept information about toy recalls from its shareholders. That would have kept the stock price up for a period.

According to CNN Money "a lawsuit, filed in Delaware’s Court of Chancery, accuses three current members and one former member of Mattel’s board of directors of engaging in illegal insider trading by dumping more than $33 million in stock before the company’s massive toy recalls this summer."

It makes for good headlines, but is there anything beyond that? It is unlikely the four members of a big company board got management to keep the recalls a secret. The odds in Las Vegas have to be at least 10,000 to 1 against that.

But, the second part of the charge may have some teeth. Mattel was slow in getting the news about recalls out. "In addition to exposing the company to … increased litigation and fines, defendants’ illegal actions have had a crippling impact on the company’s stock price," the lawsuit states.

If Mattel had been very prompt in getting out information out about the recalls, shareholders would have little recourse. But, Mattel was not speedy.

Douglas A. McIntyre