US: Judge Grants Tyco Investors Class-Action Status
Former shareholders of Tyco International Ltd., whose former chief executive and chief financial officer were convicted of fraud, have been certified as a class to sue the company and its accounting firm, PricewaterhouseCoopers.
Judge Paul Barbadoro made the ruling Monday in securities fraud cases consolidated in U.S. District Court in New Hampshire.
However, he removed one lead plaintiff, Voyageur Asset Management, saying it could not prove it was harmed.
The lawsuit alleges that former executives and board members, including former chief executive Dennis Kozlowski and former chief financial officer Mark Swartz, operated the company as a criminal enterprise to enrich themselves.
Making the case a class action means anyone who bought Tyco stock between Dec. 13, 1999, and June 7, 2002, is eligible to share in any judgment or settlement. According to some estimates, investors lost $60 billion.
Shareholder lawyer Jay Eisenhofer said Tuesday there had been no significant settlement talks, but it would be in the company's best interests to settle.
"The scope of the potential liability puts the company at risk," Eisenhofer said. "Nobody has any desire to do that, but that's the position they find themselves in now."
Tyco spokeswoman Sheri Woodruff said the company was disappointed by the ruling, but would continue defending itself.
The merits of the shareholders' claims have not been considered yet.
The ruling comes a year after Kozlowski and Swartz were convicted in a New York state court on multiple counts of grand larceny, conspiracy, securities fraud and falsifying business records.
- 204 Manufacturing