| NEW YORK
NEW YORK Dec 19 A federal judge on Wednesday
approved settlements worth $3.2 billion for investors who sued
Tyco International Ltd TYC.N following an accounting scandal
that led to the imprisonment of ex-chief Dennis Kozlowski.
Also approved was about $464 million in legal fees and
$28.9 million in expense reimbursement for the plaintiffs'
lawyers. It is believed to be the biggest-ever fee award for
attorneys in a securities class-action settlement.
The lawyers' payments, which when proposed had attracted
criticism from some institutional investors as being too hefty,
will be drawn from the settlement fund.
"In summary, I find that the settlement is fair, reasonable
and adequate," U.S. District Judge Paul Barbadoro wrote in the
Tyco agreed in May to pay $2.975 billion to settle several
long-running class-action lawsuits. Another defendant, former
Tyco auditor PricewaterhouseCoopers LLP, said in July it would
pay $225 million to resolve the litigation.
Kozlowski and former Tyco finance chief Mark Swartz were
found guilty in June 2005 of stealing millions from the
conglomerate, a case that became infamous amid revelations that
Kozlowski had used company funds to pay for a $15,000 umbrella
stand and a $6,000 shower curtain.
Kozlowski and Swartz are now serving sentences of up to 25
years apiece in New York state prison.
Plaintiffs in the shareholder lawsuit contended that from
December 1999 through June 2002, Tyco and others misrepresented
the value of acquisitions and misled investors about Tyco's
financial health. The settlements were reached before the case
ever went to trial.
The plaintiffs were represented by law firms Grant &
Eisenhofer PA, Schiffrin Barroway Topaz & Kessler LLP and
Milberg Weiss LLP. Milberg faces a criminal trial next year in
federal court in Los Angeles on charges of paying illegal
kickbacks to plaintiffs in various lawsuits. It has pleaded not
Judge Barbadoro said the fee award for the lawyers, which
amounts to 14.5 percent of the settlement fund, was appropriate
because they took big risks in bringing the case and spent
millions of their own money working on it. The lawyers worked
on contingency, meaning they would only be paid if damages were
awarded at trial or a financial settlement was reached.
The judge said that over five years, the shareholders'
lawyers put in more than 488,000 billable hours at a market
value of more than $172 million. The case was enormously
complex and involved the review of 82.5 million pages of
documents, dwarfing every other major securities class-action,
the judge wrote.
"Co-lead counsel put massive resources and effort into the
case for five long years ...," the judge wrote. "But for
co-lead counsel's enormous expenditure of time, money and
effort, they would not have been able to negotiate an end
result so favorable for the class."
The judge said that while the fee award on a percentage
basis was larger than in some other big fraud cases, it would
be against public policy for him to set an unreasonably low
award "that would encourage future plaintiffs' attorneys to
settle too early and too low."
(Editing by Richard Chang)