Tyco, SEC reach $50M settlement in fraud investigation Christopher G. Anderson at 3:12 PM ET
[JURIST] Tyco. [corporate website; JURIST news archive] has agreed to pay the US Securities and Exchange Commission [official website] a $50 million civil penalty [Tyco press release] and a $1 disgorgement fee for fraudulent accounting procedures used between 1996 through 2002, Tyco and SEC officials announced Monday. In exchange, the settlement allows Tyco to avoid admitting any of the allegations [SEC press release] in the SEC's complaint [PDF, text]. According to the SEC, Tyco executives inflated key figures - including its operating income by more than $567 million and its cash flow by $719 million - in official reports to the SEC. Tyco was also charged with making false and misleading public statements to investors and analysts and with bribing foreign officials in violation of the Foreign Corrupt Practices Act [text].
Former Tyco CEO Dennis Kozlowski and former CFO Mark Swartz were found guilty of looting the company and its shareholders out of more than $150 million in unauthorized personal compensation, and have been sentenced to prison [JURIST report] for 8 to 25 years. An appeal [JURIST report] of the conviction is pending. The company still faces a likely onslaught of shareholder litigation, which analysts predict could cost the company up to $4 billion. Bloomberg has more.
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