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Auditor settles Tyco class action

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From Times Wire Services

PricewaterhouseCoopers has agreed to pay $225 million to settle a class-action lawsuit brought by shareholders of Tyco International Ltd. over a multibillion-dollar accounting fraud that sent Tyco’s top executives to prison.

The settlement with Tyco’s former auditing firm follows one reached in May by Tyco and shareholders in which the conglomerate agreed to put $3 billion into a fund to settle most shareholder claims over the actions of Tyco’s former chief executive, L. Dennis Kozlowski, and the company’s former chief financial officer, Mark Swartz.

The settlement with PricewaterhouseCoopers, which requires approval of U.S. District Judge Paul J. Barbadoro in New Hampshire, covers investors who acquired Tyco securities from Dec. 13, 1999, to June 7, 2002.

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The shareholders claimed that as Tyco’s independent auditor, the accounting firm failed to uncover a $5.8-billion, fraudulent overstatement of earnings during that period

PricewaterhouseCoopers spokesman David Nestor said that the firm had been “prepared to continue to defend all aspects of its work” but that the cost of doing so “made settlement the sensible choice.”

Though nominally based in Bermuda, Tyco operates from West Windsor, N.J.

Kozlowski and Swartz were convicted of grand larceny and other crimes and are serving prison terms of eight to 25 years.

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