SEC v. Tyco International Ltd.
Case No. 06-cv-02942-RWS (S.D.N.Y.)
On April 17, 2006, the Commission filed a complaint against Tyco International Ltd ("Defendant"). The complaint alleged that, from 1996 through 2002, the Defendant violated federal securities laws when it engaged in various improper accounting practices. According to the complaint, Tyco overstated its reported financial results, improperly used reserve accounts to enhance and smooth reported financial results, engaged in improper acquisition accounting practices and concealed from investors substantial amounts of senior executive compensation and a large number of related party transactions.
The Defendant was ordered to pay a total of $50,000,001.00 in disgorgement and penalties. The Clerk of Court was ordered to hold all funds in an interest bearing account with the Court Registry Investment System (collectively, the "Fund"), pending further order of the Court. See Defendant's Final Judgment.
The Defendant has paid a total of $50,000,001.00 into the Fund for the distribution to harmed investors.
On August 28, 2006, the Court appointed Damasco & Associates LLP as the Tax Administrator to fulfill the tax obligations of the Fund.
On August 19, 2009, the Court entered an order to establish a Fair Fund for the $50,000,001.00 in disgorgement and penalties paid by the Defendant and appointed The Garden City Group, Inc. as the Distribution Agent to oversee the administration and distribution of the Fair Fund to harmed investors. See Court's Order.
On October 28, 2010, the Commission filed a motion to approve a distribution plan, together with the distribution plan ("Distribution Plan"). See Motion and Distribution Plan.
On November 24, 2010, the Court approved the Distribution Plan. See Order Approving Distribution Plan.
The Distribution Plan provides that the distribution of the Fair Fund shall be made to those investors who were harmed by the Defendant's misconduct and suffered a net less, as calculated in accordance with the Plan of Allocation, attached as Exhibit A to the Distribution Plan.
On April 18, 2013, the Commission filed a motion for an order to transfer the assets of the Fair Fund to the Distribution Agent and for the Distribution Agent to distribute approximately $56 million to eligible investors. See Motion for Transfer of Funds for Disbursement.
On April 25, 2013, the Court granted the Commission's motion and entered an order to disburse the assets of the Fair Fund to the Distribution Agent, approximately $56.2 million, and for the Distribution Agent to disburse all of the funds, except for a reserve of $150,000.00, to eligible investors in accordance with the Distribution Plan. See Order to Transfer Funds for Disbursement.
On December 2, 2015, the Commission filed a motion for an order authorizing a second distribution of approximately $2.39 million to those eligible investors that negotiated their first distribution payment. See Motion for Second Distribution. On January 5, 2016, the Court entered an order granting the Commission's motion. See Order Approving Disbursement.
On July 24, 2018, the Court entered an order approving the final accounting of the Fair Fund, terminating the Fair Fund, and discharging the Distribution Agent. See the Court's Order.