Tyco Sues Its Former CEO
Trading Profits Sought From Kozlowski, Another ExecutiveDec 10, 2002 | AP Tyco International Ltd. today sued its former chief executive, L. Dennis Kozlowski, and former chief financial officer Mark H. Swartz , alleging that they made more than $40 million in "short-swing" stock trades.
The lawsuit, filed in Manhattan federal court, alleges the two men made dozens of such trades beginning in August 2000. Under Securities and Exchange Commission rules, the company is allowed to seize any "short-swing" profits made by corporate insiders who buy and then sell the firm's stock within a six-month period.
The suit seeks disgorgement of those profits, plus unspecified fees and costs associated with the case.
Attorneys for Kozlowski and Swartz did not immediately return calls seeking comment.
The two men are currently out on bail while awaiting trial for allegedly stealing about $600 million from Tyco. They face up to 25 years in prison if convicted on charges of enterprise corruption and grand larceny.
Kozlowski resigned in June before he was indicted on charges of evading New York sales taxes. He is accused of illegally avoiding paying $1 million in sales tax on paintings that were purchased in New York and allegedly shipped to Tyco offices in Exeter, N.H., and then returned to New York.
Tyco's former general counsel, Mark A. Belnick, has been charged with falsifying business records to cover up $14 million in improper loans. He faces up to four years in prison if convicted. He also faces a civil lawsuit from his former company.
Tyco, a conglomerate that makes products including coat hangers, valves and security systems, is based in Bermuda but is run from Exeter.
In trading on the New York Stock Exchange, Tyco shares fell 46 cents Monday to close at $16.24 each.
Separately, Tyco announced the appointment of Martina Hund-Mejean as senior vice president and treasurer.