Lawyers who won a class action suit against Tyco International and PricewaterhouseCoopers will be awarded 14.5 percent of the $3.2 billion settlement, plus nearly $29 million in expenses, a judge has ordered.
In an order issued Wednesday, U.S. District Judge Paul Barbadoro approved co-lead counsels' request for fees and expenses, citing the length and complexity of the case, and lawyers' success in winning the largest cash payment from a corporate defendant in the history of securities litigation.
"This was an enormously complex case, and counsel assumed substantial risk in pursuing it. The number of mergers and acquisitions that were scrutinized and the novelty and difficulty of the legal issues that were presented leave this case with few comparable precedents," Barbadoro wrote.
Tyco has agreed to set up a $2.975 billion cash fund to pay claims filed by shareholders against the company arising from actions by ex-chief executive L. Dennis Kozlowski and other top officers convicted of looting Tyco and inflating its value. Accounting firm PricewaterhouseCoopers has agreed to pay $225 million to settle a multibillion dollar accounting fraud that sent Tyco's top executives to prison.
"In all, the proposed settlement is the third-largest securities class action recovery in history, behind only Enron and Worldcom," Barbadoro wrote.
The settlement covers investors who acquired Tyco securities from Dec. 13, 1999, to June 7, 2002. Tyco has its operating headquarters in West Windsor, N.J., and is nominally headquartered in Bermuda. The lawsuits were filed in New Hampshire because the company was formerly headquartered in Exeter.
The shareholders' suit had claimed that as Tyco's independent auditor, PricewaterhouseCoopers failed to uncover fraud in the accounting scandal at the conglomerate. According to the shareholders' legal team, Tyco overstated its income during that period by $5.8 billion.
Barbadoro's 67-page order also gave a progress report on the class action settlement:
- Claims packages have been mailed to 2.4 million members of the class action suit and ads publicizing the settlement have been published in newspapers across the country.
- As of Oct. 12, claims administrator Garden City Group Inc. had received 74,655 completed claim forms and 288 requests to be excluded from the class.
- The claim deadline is Dec. 28. Garden City Group has set up a Web site and toll free number to help people fill out their forms.
Money will be divided among shareholders after attorney's fees are deducted. Jay Eisenhofer, one of the three co-lead counsels in the case, has said money could be distributed as early as 2008.