A former board member of Tyco International, the Roszel Road-based manufacturing conglomerate that owns several product lines including the ADT security system, has agreed to pay $5.6 million to the state of New Jersey to settle a seven-year-old case of alleged insider trading.
Frank Walsh Jr. was accused in a state-filed lawsuit from 2002 of receiving $20 million for his role in Tyco’s acquisition of commercial lender CIT (now bankrupt). The payment, the state alleged, was not only improper, but also never revealed to the company’s investors. The state claimed that the action constituted fraud and insider trading and disrupted New Jersey’s pension fund to the tune of $100 million.
The settlement with Walsh was announced on November 12, when Attorney General Anne Milgram said that the settlement represented “significant recoveries for our state pension funds.”
Walsh, according to the New York Times, admitted during his trial that he did receive an unauthorized $20 million fee for helping to close the CIT deal, but was told to say nothing by his former boss, Dennis Kozlowski. Kozlowski and Mark Swartz, Tyco’s former leaders, were convicted in 2005 of misleading investors and abusing company perks.
Tyco itself settled with New Jersey last April for $73 million. According to Dow Jones, Tyco’s auditors, PricewaterhouseCoopers and a Bermuda affiliate agreed to pay $5.85 million in March. The settlement with Walsh brings the state’s total revenue from Tyco-related lawsuits to about $85 million.
Tyco International Ltd. (TYC), 9 Roszel Road, Princeton 08540; 609-720-4200; fax, 609-720-4208. Edward Breen, chairman and CEO. www.tyco.com.