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12 Jul 2007
The settlement was announced this week, heading off a significant concern for the US firm. The move follows an agreement whereby shareholders took on claims against the auditor, while Tyco took on claims against former directors.
The audit claim arose after the telecoms and security giant was embroiled in a securities fraud lawsuit, when two executives at Tyco were implicated in a profit manipulation scandal.
Former CEO and CFO Dennis Kozlowski and Mark Swartz were accused of inflating revenues by $5.8bn, raking in $150m for themselves during the late 1990s and early 2000s.
Earlier this year Tyco assigned claims against its former auditors to investors after agreeing to pay $3bn to settle its own case out of court. In return, the shareholders gave Tyco claims against Kozlowski and Swartz, receiving half of what the company recoups from the pair.
A spokesman for PwC in the US said it had decided to resolve the litigation as the cost of defending the case made settlement ‘the sensible choice for the firm’.
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Briefings
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