Tyco will settle fraud for $3B
By ASSOCIATED PRESS
Published May 16, 2007
CONCORD, N.H. - Tyco International Ltd. said Tuesday it has agreed to pay about $3-billion to settle shareholder claims from one of the largest corporate fraud cases ever.
Tyco said it would set up a $2.975-billion cash fund to pay claims filed by shareholders against the company arising from actions by ex-chief executive officer L. Dennis Kozlowski and other top officers convicted of looting the company and inflating its value.
Tyco said it would take a charge of that amount during the current quarter.
Tyco spokesman Paul Fitzhenry said the company also would pay interest on the $2.975-billion and turn over half of any money it recovers from ongoing lawsuits against Kozlowski, former chief operating officer Mark Swartz and former board member Frank Walsh.
Investors, including union and state pension funds and Tyco retirees, were permitted last summer to proceed with a consolidated class-action lawsuit in the U.S. District Court in New Hampshire, where Tyco was formerly headquartered.
The settlement covers shareholders from December 1999 to June 2002 and, in some of the consolidated cases, investors who owned stock starting in October 1998, the company said.
"This is a fantastic resolution and closes a chapter on one of the largest and most appalling examples of corporate fraud in U.S. history, " said Jay Eisenhofer, managing partner at Grant & Eisenhofer.