State securities regulators said Wednesday they have reached a $5 million settlement with Tyco International over allegations of misconduct by several former top Tyco executives.
Tyco signed the agreement without admitting the allegations.
The state alleged that former employees of Tyco including former chief executive Dennis Kozlowski, former chief financial officer Mark Swartz, and former corporate counsel Mark Belnick misused corporate funds, made transactions without proper corporate approval, and filed false and incomplete regulatory statements with the state.
Also named by the state was former board member Frank Walsh.
“The actions by these named Tyco employees represent the highest form of corporate mistrust and greed,” said Mark Connolly, director of securities regulation for the state. “Through their actions, shareholders suffered and investor confidence in public companies was further shaken.”
Under the agreement, Tyco will pay the state $5 million, which will be used to finance an investor education program. The company also will reimburse the state about $100,000 for the costs of its investigation.
“We believe this consent agreement is in the best interests of our shareholders and employees and reflects the company’s commitment to a continued presence in New Hampshire,” said Edward Breen, who was appointed Tyco’s chairman and CEO in July.
Actions the company will take under the settlement “underscore the absolute commitment of Tyco’s new management to establishing and enforcing the highest standards of corporate behavior,” Breen said in a statement.
Kozlowski and Swartz have been charged by the Manhattan District Attorney’s office with enterprise corruption and grand larceny for allegedly stealing $600 million from the company. They have pleaded innocent.
Belnick has been charged with falsifying business records to cover up $14 million in improper loans.
Tyco has sued or brought arbitration actions against the former executives. In a lawsuit, it says Walsh, the former lead director, received $20 million as a finder’s fee after the company bought its CIT lending unit last year, without proper approval from the board.
Tyco’s stock dropped sharply in February after the fee was publicly disclosed.
Walsh has denied any wrongdoing, saying Kozlowski knew about the the finder’s fee and that it was properly disclosed.
Tyco, a manufacturing conglomerate with headquarters in Bermuda, has its U.S. headquarters in Exeter. It had $36 billion in revenue last year. It makes products ranging from coat hangars to security systems and medical devices.