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Impact Investing

IPE special report May 2018

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Tyco pays $3bn in settlement

US - Electronics company Tyco International agreed to pay shareholders $2.975bn (€2.2bn) to settle accounting fraud claims.

Between 1999 and 2002, the company allegedly overstated its income by $5.8bn so various investors, including US institutions, who suffered financial losses took Tyco to court.

The settlement "represents the single largest payment from any corporate defendant in the history of securities class action litigation," commented US-law firm Schiffrin Barroway Topaz & Kessler (SBTK) LLP, one of the firms representing the investors. The other two were Grant & Eisenhofer P.A. and Milberg Weiss & Bershad LLP.

Tyco's agreement "has great effect on European investors as Tyco is a stock widely held by European institutions," a spokesman for SBTK pointed out to IPE.

"In addition, the sheer value of the settlement and the deterrent factor it has on this type of conduct going forward is important to all investors."

The largest European pension fund, the Norwegian Government Pension Fund - Global, currently holds NOK1.5bn (€183m) in Tyco shares and NOK451m in Tyco bonds.

There are also claims against the company's auditor PriceWaterhouseCoopers (PwC) in the Tyco accounting scandal which are not yet settled. PwC is alleged to have failed in its duties as a corporate watchdog

In 2005, a New York State court convicted Dennis Kozlowski, Tyco's former chief executive, along with Mark Swartz, the company's former chief financial officer, for falsifying business records along with other charges.

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