NEW YORK (CNNMoney.com) -- Tiffany and Co. agreed to pay a $262,500 civil penalty to settle allegations that it failed to report a hazard with its infant teether rattles, the Consumer Product Safety Commission (CPSC) said Wednesday.

The New York-based luxury jeweler recalled about 3,700 teether rattles in February 2005 because of the choking and aspiration risks they pose to babies.

CPSC alleged that Tiffany failed to report in a timely manner that the center bar on the Farm Teether Rattle could break, releasing small beads and animal figures.

Tiffany and Company received at least three reports of defective joints in the teethers between November 2003 and February 2004.

In one incident, a baby was reported to have mouthed a small animal figure that fell off of the teether rattle.

Tiffany's failed to notify consumers who had purchased the teether and did not report the problem to CPSC until after the Commission had opened its own investigation, the CSPC said.

As part of the settlement, Tiffany's denied it violated the Consumer Product Safety Act by failing to report defects with its Farm Teether Rattles in a timely manner.

For more information about the recall, contact Tiffany's at (800) 464-5000 between 10 a.m. and 5 p.m. ET, Monday through Friday, or visit the firm's Web site at www.tiffany.com.