On January 15, 2018, Whitaker scheduled a meeting at Wong's request with Mattel's SVP of Accounting, Joe Johnson; VP of Accounting, Christine Lew; VP of Internal Audit, Beverly Lively; Director of Internal Audit, Vladimir Marinescu; Assistant Controller, Nathan Yoo; and Martin. ¶126. Whitaker explained that by the end of this meeting, there was “no conflict or confusion” concerning the materiality of the error in Mattel's financial statements. ¶127. Whitaker also reported that “there was no conflict that this was a material weakness” because of the severity of the error and because it was the second time it occurred in one quarter. ¶129.
Despite this consensus, Johnson, Mattel's SVP of Accounting, who reported directly to Defendant Euteneuer, stated, “We cannot have a material weakness. That would be the kiss of death.” ¶130. Whitaker explained that he understood Johnson's statement to reference the anticipated negative market reaction to the disclosure of material weaknesses in Mattel's internal controls, especially in light of the significant financial headwinds Mattel was facing. ¶131. Although the agreement at the end of the meeting was that “this was a clear-cut material weakness,” the team was holding out hope that they could find a way around it. ¶132.
On January 15, 2018, Whitaker scheduled a meeting at Wong's request with Mattel's SVP of Accounting, Joe Johnson; VP of Accounting, Christine Lew; VP of Internal Audit, Beverly Lively; Director of Internal Audit, Vladimir Marinescu; Assistant Controller, Nathan Yoo; and Martin. ¶126. Whitaker explained that by the end of this meeting, there was “no conflict or confusion” concerning the materiality of the error in Mattel's financial statements. ¶127. Whitaker also reported that “there was no conflict that this was a material weakness” because of the severity of the error and because it was the second time it occurred in one quarter. ¶129.
Despite this consensus, Johnson, Mattel's SVP of Accounting, who reported directly to Defendant Euteneuer, stated, “We cannot have a material weakness. That would be the kiss of death.” ¶130. Whitaker explained that he understood Johnson's statement to reference the anticipated negative market reaction to the disclosure of material weaknesses in Mattel's internal controls, especially in light of the significant financial headwinds Mattel was facing. ¶131. Although the agreement at the end of the meeting was that “this was a clear-cut material weakness,” the team was holding out hope that they could find a way around it. ¶132.
The Mattel team considered whether they could “get away with” a “Little r” restatement .