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LITIGATION RELEASE 17896
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EXTRACTED KEY WORDS
TYCO FEE TRANSACTION SECURITIES MERGER REGISTRATION STATEMENT COMMISSION AGREEMENT KOZLOWSKI EXCHANGE PLAN OFFICER CIT CONNECTION EXCHANGE ACT PAID INVESTMENT PAY COMPLAINT YORK DISTRICT CIVIL ACTION MATERIALLY MISLEADING COMPENSATION COMMITTEE RESTITUTION SUBSTANTIAL FEE MEETING CHIEF EXECUTIVE OFFICER FEDERAL SECURITIES LAWS |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
LITIGATION RELEASE NO. 17896 / December 17, 2002
TYCO FORMER LEAD DIRECTOR AND CHAIRMAN OF COMPENSATION COMMITTEE FRANK
E. WALSH, JR. CHARGED WITH MATERIALLY MISLEADING CIT'S AND TYCO'S
SHAREHOLDERS BY COLLECTING SECRET $20 MILLION "FINDER'S FEE" IN
CONNECTION WITH TYCO'S 2001 ACQUISITION OF THE CIT GROUP, INC.
, Civil Action No. 02-CV-9921
The Securities and Exchange Commission (the "Commission") today filed
a settled civil action in the U.S. District Court for the Southern
District of New York alleging that Frank E. Walsh, Jr. ("Walsh")
violated the federal securities laws by signing a Tyco International
Ltd. ("Tyco") registration statement which Walsh knew contained
materially misleading statements concerning fees or commissions
payable in connection with Tyco's June 2001 $9.2 billion acquisition
of The CIT Group, Inc. ("CIT").
The Complaint filed in the Commission's civil action alleges the
following
In late 2000, Walsh, a director of Tyco from 1992 through February of
2002 who served as Chairman of the Tyco Board of Directors (the
"Board") Compensation Committee, a member of the Board's Corporate
Governance Committee, and most recently, Tyco's Lead Director,
recommended that Tyco consider acquiring CIT. L. Dennis Kozlowski
("Kozlowski"), Tyco's then and now former Chief Executive Officer,
asked Walsh to set up a meeting between Kozlowski and CIT's Chief
Executive Officer. After that meeting, Kozlowski proposed to pay Walsh
a "finder's fee" for his services if the transaction was consummated.
When the transaction was submitted to the Board, Walsh voted in favor
of the transaction but intentionally did not disclose to the Board
that he would receive a substantial fee in connection with the
transaction.
The terms and conditions of the Tyco/CIT merger were set forth in the
Agreement and Plan of Merger dated March 12, 2001 (the "Agreement and
Plan of Merger"). The Agreement and Plan of Merger contained a
representation by Tyco that, other than Tyco's investment bankers for
the transaction, no other investment banking or finder's fees were to
be paid in connection with the transaction. The Agreement and Plan of
Merger was incorporated by reference in, and attached to, a
registration statement (the "Registration Statement") filed by Tyco
with the Commission for the securities related to the contemplated
merger between Tyco and CIT. As a director of Tyco, Walsh signed the
Registration Statement. At the time that he signed, Walsh knew that
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COMPLAINT
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EXTRACTED KEY WORDS
WALSH TYCO EXCHANGE ACT SECURITIES TRANSACTION FEE COMMISSION REGISTRATION STATEMENT MERGER KOZLOWSKI CONNECTION AGREEMENT VIOLATIONS OFFICER BUSINESS COURSES PRACTICES DEFENDANT WALSH PURSUANT CIT ALLEGES PLAN DIRECTORS COURT EXCHANGE ACT RULE REPRESENTATIONS INVESTMENT BANKERS PAY WALSH CHIEF EXECUTIVE OFFICER |
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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SECURITIES AND EXCHANGE COMMISSION, |
450 Fifth Street, N.W. |
Washington, D.C. 20549, |
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Plaintiff, | Civil
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v. |
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FRANK E. WALSH, JR., |
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Defendant. |
COMPLAINT
Plaintiff Securities and Exchange Commission (the "Commission") alleges:
SUMMARY
1. This action involves violations of the federal securities laws by Frank E. Walsh, Jr.
("Walsh"), a former director of Tyco International Ltd. ("Tyco"), in connection with
Tyco's June 2001 $9.2 billion acquisition of The CIT Group, Inc. ("CIT"). Walsh
registration statement filed by Tyco in connection with the CIT acquisition, which
knew contained materially misleading statements concerning fees or commissions
payable in connection with the transaction.
JURISDICTION AND VENUE
2. This Court has jurisdiction over this action pursuant to Section 20 of the Securities
of 1933 ("Securities Act") [15 U.S.C. § 77t] and Sections 21(d), 21(e), and 27 of the
Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. §§ 78u(d), 78u(e), and
78aa].
3. Defendant Walsh, directly or indirectly, has made use of the means or instrumentalities
of interstate commerce, or of the mails, or the facilities of a national securities
exchange in connection with the transactions, acts, practices, and courses of
alleged herein.
4. Certain of the acts, practices, and courses of conduct constituting the violations of
alleged herein occurred within this judicial district.
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