U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22491 / September 24, 2012
Accounting and Auditing Enforcement Release No. 3409 / September 24, 2012
Securities and Exchange Commission v. Tyco International Ltd, 1:12-CV-01583 (D.D.C. filed Sept. 24, 2012)
SEC CHARGES TYCO WITH MAKING ILLICIT PAYMENTS TO FOREIGN OFFICIALS
The Securities and Exchange Commission today announced that it filed a settled civil action in the United States District Court for the District of Columbia against Tyco International Ltd. The complaint alleges that Tyco violated the books and records, internal controls, and anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). Tyco has agreed to pay over $13 million in disgorgement and prejudgment interest to settle the charges.
In April 2006, the Commission filed a settled accounting fraud, disclosure, and FCPA injunctive action against Tyco. At the time of the 2006 settlement, Tyco had committed to and commenced a review of its FCPA compliance and a global internal investigation of possible additional FCPA violations. As a result of that review and investigation, certain FCPA violations have come to light for which the misconduct occurred, or the benefit to Tyco continued, after the 2006 injunction. Those are the violations that are alleged in today's complaint.
Accordingly, the Commission's complaint alleges that, from 2006 to 2009, Tyco subsidiaries operated twelve illicit payment schemes. Many of the schemes involved fake commissions and related payments, and several also included the use of third-party agents to funnel money improperly. The complaint further alleges that Tyco's books and records were misstated as a result of the misconduct and that Tyco failed to devise and maintain internal controls sufficient to detect the violations. The complaint also alleges that payments by a sales agent to Turkish government officials violated the anti-bribery provisions of the FCPA.
In settling the Commission's charges, Tyco has consented to the entry of a proposed final judgment permanently enjoining it from violating Sections 13(b)(2)(A), 13(b)(2)(B), and 30A(a) of the Securities Exchange Act of 1934 and ordering it to pay disgorgement of $10,564,992, plus prejudgment interest of $2,566,517. The proposed settlement is subject to the approval of the District Court.
According to the SEC's complaint, Tyco voluntarily disclosed this conduct to the Commission and thereafter took extensive remedial measures, including firing the employees involved in the misconduct, exiting certain lines of business, and making significant enhancements to its FCPA compliance program.
The Commission acknowledges the assistance of the U.S. Department of Justice's Fraud Section in this matter. Today the Department of Justice announced related criminal proceedings, pursuant to which Tyco has agreed to pay criminal penalties in excess of $13 million.
For further information about the Commission's 2006 action against Tyco, see Litigation Release No. 19657 (Apr. 17, 2006).