Tyco’s proposed settlement with investors
A proposed settlement between Tyco and the SEC’s enforcement division is pending before a U.S. District Court. Under the settlement, the SEC will determine how to distribute $50 million paid by Tyco.
The civil complaint filed by the SEC alleges that accounting fraud occurred from 1996 through mid-2002 while former CEO Dennis Kozlowski was trying to turn the company into a global manufacturing and services big-shot. Unfortunately, Kozlowski stole from the company and lied about its financial performance. SEC filings by Tyco alleged failed to disclose some executive compensation as well as large loans to executives (which were later forgiven). The company also allegedly inflated its operating income by $500 million by undervaluing assets of its acquisitions. It inflated operating income by an additional $567 million by improperly deducting certain expenses.
Kozlowski and former CFO Mark Swarts were both convicted of grand larceny, conspiracy, and securities fraud and falsifying business records in connection with their theft of about $600 million from Tyco.
Tags: Tyco, SEC, civil complaint, accounting fraud, executive compensation, operating income, grand larceny, conspiracy, securities fraud
