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SEC v. Tyco International Ltd.

 
:
Tyco - Tyco International Ltd.
:
SEC Civil
:
April 13, 2006
:
SEC v. Tyco International Ltd.
:
SEC v. Tyco International Ltd., No. 06-CV-2942 (S.D.N.Y. 2006)
:
The FCPA allegations were only a small portion of an extensive set of alleged securities law violations. However, the FCPA violations were principally that management ignored red flags brought to its attention about corrupt conduct.
:
Service-Other/Multi
:
Brazil, South Korea
:
1999; 2000; 2001; 2002
:
Brazilian officials; South Korean officials; employee of South Korean nuclear power plant
:
Tyco settled this action with the SEC without admitting or denying the following facts alleged in the SEC's complaint.

Tyco allegedly engaged in a scheme to violate the federal securities laws by overstating financial results, smoothing those reported earnings, and hiding vast amount of senior executive compensation and a large number of related party transaction from investors. To achieve these aims, the company allegedly utilized a number of improper practices, including payments to foreign officials for the purpose of obtaining or retaining business in violation of the FCPA.

Between 1996 and 2000, Tyco acquired more than 700 companies to become a global and diversified manufacturing and service conglomerate. In 1998, Tyco acquired Earth Tech Brazil notwithstanding the fact that it knew Earth Tech had made various illegal payments to Brazilian officials to obtain business. Another one of Tyco's acquisitions, Dong Bang, a South Korean firm, spent $32,000 entertaining various South Korean officials and paid $7,500 to an employee of a nuclear power plant to obtain contracts. Despite the fact that Tyco knew such payments were common in Brazilian and South Korean business practices, it did not have an FCPA compliance program and its system of internal controls was insufficient to prevent these types of misconduct at a global level.

Tyco consented to a final judgment ordering it to pay $1 in disgorgement and $50 million civil penalty.
:
Anti-bribery (Issuer), Books and records (Issuer), Internal controls (Issuer)
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Civil penalty, Disgorgement
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$1 disgorgement, $50M civil penalty.

While the majority of the $50M penalty presumably stems from non-FCPA offenses, the Final Judgment does not detail the amounts attributable to each violation.
:
50,000,001
:
0
:
Issuer
:
Foreign
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Contract Procurement/Retention
:
Not stated.
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Cash, Entertainment
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Direct
:
39,500
:
Brazil, South Korea
:
No
:
No