Mattel to settle lead toy probe

Toy maker Mattel Inc. will pay $12 million to 39 states to settle an investigation into Chinese-made lead-tainted toys shipped to the U.S. in 2007, state officials said Monday.

The El Segundo company and its Fisher Price unit recalled more than 21 million Chinese-made toys last year, beginning in August, fearing the items were tainted with lead paint and tiny magnets that children could accidentally swallow.

All the affected toys were pulled off shelves by December 2007.

As part of the agreement, Mattel also agreed to lower the acceptable level of lead in toys shipped to the states to 90 parts per million, down from 600 parts per million, which is currently the federal standard.

When new regulations go into place next year, however, the federal standard will also fall to 90 parts per million.

“We are pleased this agreement with Mattel and Fisher Price will result in much safer standards,” Massachusetts Atty. Gen. Martha Coakley said.

“Mattel has demonstrated its commitment to children’s safety by pledging to meet standards even more stringent than those currently required,” Mattel said in a statement.

California also took part in negotiations but reached a separate agreement under its Safe Drinking Water and Toxic Enforcement Act. As part of that agreement, California said Thursday that nine toy companies, including Mattel, would pay the state $1.8 million over lead-tainted toys.

Needham & Co. analyst Sean McGowan said the settlement had been anticipated, and $12 million was probably less than the legal costs the company would have incurred if the company hadn’t reached a settlement with the states.

“Anything that would put to rest this question [of toy safety] is a net positive, as long as it’s not terribly crippling, and $12 million is pretty good to put to rest state-level actions,” he said. But he noted there were pending class-action suits from consumers.

Mattel, which must pay the settlement by Jan. 30, saw shares fall 7 cents to $14.53.