PricewaterhouseCoopers has agreed to pay Tyco International shareholders $225 million in compensation for failing to uncover the financial fraud that shareholders claimed led to nearly $6 billion in overstated income between 1999 and 2002. The settlement is one of the largest recoveries on record from an outside auditor in securities class action litigation, according to attorneys for the plaintiffs.
The settlement must be approved by Judge Paul Barbadoro, the federal judge overseeing the four-year-old Tyco class action litigation. In May, Tyco agreed to put nearly $3 billion in a fund to settle shareholder claims. Investors who acquired Tyco International securities from Dec. 13, 1999, through June 7, 2002, are covered by the settlements.
Dennis Kozlowski and Mark Swartz, Tyco International's former CEO and CFO respectively, are serving to up to 25 years in prison after being convicted of falsification of business records, grand larceny and conspiracy. Frank Walsh, a former Tyco International board member, also pled guilty to committing fraud.
"This settlement with PricewaterhouseCoopers serves as an exclamation point for our litigation over what was one of the most egregious corporate frauds of our time," said Richard Schiffrin, founding partner of Schiffrin Barroway Topaz & Kessler, one of the firms representing Tyco shareholders.