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Compliance November 25, 2009
Tyco Stock Drop Settlement Gets Court OK
November 25, 2009 (PLANSPONSOR.com) – A federal judge in New Hampshire has given final approval of a $70.5-million settlement of a stock drop suit against Tyco International that includes $21.1 million in lawyer fees.
Reported by Fred Schneyer
U.S. District Judge Paul J. Barbadoro of the U.S. District Court for the District of New Hampshire issued two orders in the seven-year-old suit, one implementing the proposed settlement and the other setting attorney fees.
The suit alleged that a decrease in the value of the company’s shares meant participants ended up losing a substantial portion of their retirement savings. In their lawsuit, the employees charged that Tyco and its top officials also breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by lying to participants about the company’s financial condition and the risk characteristics of the company stock fund.
The suit alleged the company was negligent in continuing to feature company stock as a retirement plan investment option.
In addition to the funds to be paid by the company, an additional $325,000 will be paid by two former executives of Tyco who were defendants in the case. The case is Overby v. Tyco International Ltd., D.N.H., No. 02-CV-1357-B.
Barbadoro ruled in April that Tyco was
not entitled to use an ERISA safe harbor defense in the case (see 404(c) No Defense in Stock Fund Fiduciary Suit ).