Tyco International Ltd. announced May 15 that its agreed to settle most of the class-action lawsuits involving its stock and actions of prior management, including former CEO Dennis Kozlowski, former COO Mark Swartz and other officers.
Kozlowski and Swartz were convicted in New York State in 2005 of grand larceny, conspiracy, securities fraud, and fabricating business records in connection with stealing $600 million from the company and falsely inflating its value. They were sentenced to eight to 25 years in prison in September 2006, and remain in jail pending appeals.
Under the proposed settlement, Tyco will establish a $2.975 billion cash settlement fund to pay plaintiffs claims in the consolidated class-action securities cases. The settlement is subject to court approval and the participation of plaintiffs holding a significant percentage of Tycos shares in the class.
With this settlement, were taking an important step to resolve our most significant remaining legacy legal matter, says Ed Breen, Tycos chairman and CEO. Our balance sheet and cash flow remain strong and will allow us to readily absorb these costs while removing much of the uncertainty around legacy legal matters.
The settlement is the result of a complaint filed in January 2003 by a class of shareholders who bought or acquired Tycos traded securities from December 1999 to June 2002. The class was certified by the U.S. District Court for New Hampshire in June 2006. Most cases were transferred to the courts Judicial Panel on Multidistrict Litigation for discovery coordination. The settlement also involves cases encompassing the class period from Oct. 1, 1998.