PwC agrees to $225 million class action settlement
The settlement with PwC, reached after four years of hard-fought litigation and extensive mediation, represents one of the largest recoveries on record from an outside auditor in the history of securities class action litigation. Investors who purchased or acquired Tyco securities from December 13, 1999 through and including June 7, 2002 are covered by the settlement.
Shareholders alleged that as Tyco's auditor, PwC was in a unique position to uncover the fraud and to prevent the damages to Tyco's shareholders. However, PwC is alleged to have failed in its duties as a corporate watchdog at a time when Tyco is alleged to have overstated its income during the class period by $5.8 billion.
Defendants Dennis Kozlowski (Tyco's former CEO) and Mark Swartz (former CFO) have been sentenced to up to 25 years in prison after being convicted of grand larceny, falsification of business records and conspiracy for their roles in the alleged scheme to defraud investors. Former Tyco board member Frank Walsh has also pled guilty to committing fraud.
The Class is represented by co-lead counsel, Schiffrin Barroway Topaz & Kessler, LLP, Grant & Eisenhofer P.A., and Milberg Weiss & Bershad LLP. "This settlement with PwC serves as an exclamation point for our litigation over what was one of the most egregious corporate frauds of our time. This result is significant because investors in public markets need to have confidence in the truth of what is reported, said Richard Schiffrin, founding partner of Schiffrin Barroway.
"When there is a breakdown, this settlement shows that investors will not be satisfied until there is accountability and responsibility on behalf of not just the company at issue, but also the purported corporate watchdogs," added Jay Eisenhofer of Grant & Eisenhofer.
Sanford Dumain of Milberg Weiss further stated, "We are pleased that this settlement represents by far the largest settlement ever agreed to by PwC. The amount of the settlement is especially significant in light of the claim by securities fraud defendants that recent court decisions have erected enormous obstacles to proving loss causation and damages." Several union and public pension funds, including the United Association General Officers Pension Plan, United Association Office Employees Pension Plan, United Association Local Union Officers & Employees Pension Fund, Plumbers and Pipefitters National Pension Fund, Teachers Retirement System of Louisiana and Louisiana State Employees Retirement System served as class representatives certified by the court in this litigation.
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