According to a news release from Attorney General Mike Cox and Treasurer Robert Kleine, t he complaint alleges that Tyco continually inflated its earnings and manipulated its books to hide excessive executive compensation. In addition, Tyco misled its investors by implementing improper accounting practices, which they internally referred to as “financial engineering,” the officials allege.
The state announcement said Tyco stock hit an artificial all-time high in 2001, fueled by the fraud scheme. The suit charges that as the fraud scheme began to fall apart, Tyco stock plummeted and led to the sizable losses.
The federal court lawsuit names the company, its auditors, and four of its former executives and directors.
“Safeguarding pensions is a top priority of my office,” said Cox, in the news release. “We will do everything we can to ensure that employees aren’t cheated out of the pensions that are rightfully theirs.”
Tyco’s former CEO, Dennis Kozlowski, and CFO, Mark Swartz, were convicted in New York of grand larceny, falsification of business records, and conspiracy, and are currently serving lengthy federal prison sentences. A former director pled guilty to securities fraud (See Tyco Shareholders Turn Thumbs Down on Proposals ).
The State of Michigan Retirement Systems (SMRS) manages approximately $62 billion in assets.
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