Tyco today said it has reached an agreement with the Securities and Exchange Commission (SEC) that closes the SEC Enforcement Division’s investigation of “certain accounting practices and other actions by former Tyco officials.” According to a press release, Tyco will pay a fine of $50 million.
“Former Tyco officials” mainly refers to Dennis Kozlowski, former CEO of the company, who was accused of “robbing” Tyco’s bank accounts. The SEC investigated a total of 22 counts of grand larceny for $150 million in unauthorized bonuses, such as a now famous $6000 shower curtain for Kozlowski, a $1 million birthday bash for Kozlowski’s wife, $27.5 million for apartment purchase, about $70,000 for jewelry, $155,000 for clothing, $97,000 for flowers and $110,000 for corporate use of his personal yacht.
According to the SEC, “improper loans” to Kozlowski amounted to a total of $315 million. “Kozlowski (…) treated Tyco as [his] private bank, taking out hundreds of millions of dollars of loans and compensation without ever telling investors,” said Stephen Cutler, the SEC’s director of enforcement, at the time the suit was filed.
“This investigation was one of several legacy matters inherited by the current management team as a result of alleged wrongdoing on the part of previous management. We have cooperated fully with the SEC and are pleased to be able to close this chapter in Tyco’s history,” said Ed Breen, Tyco’s current chairman and chief executive officer.