Monday, October 17, 2011

Dividing the Tyco SEC Fair Fund Pot

A decade ago, the Tyco company took a big fall and they were sued for allegedly overstating their financial results. The result of the litigation is that there is a $50 million pot of money to be divided among Tyco investors who held stock during the critical period. I mentioned a while back that I'm trying to get access to my share.

I had thought that being Canadian rather than American would be a barrier, but seems not to be a problem. The real challenge has been to get my evidence of being a shareholder accepted. I have all the relevant records, but I twice got responses saying that my claim "has been wholly rejected" due to certain "defects".

They keep asking me for records of a transaction on 2003 March 14. Explaining that I made no transaction on this date didn't help. During a telephone call with a pleasant person, I learned that I need to produce proof that I still owned shares on this date. I'm not sure how I was supposed to understand this from a letter stating that I need to send "supporting documentation for a transaction on 03/14/2003".

This process has been annoying, but potentially profitable. If many people ran into the same confusion that I had, then there will be fewer investors dividing up the $50 million. Of course, there is still the possibility that my claim will be rejected for some other incomprehensible reason.

The interesting part of all this is that I'm actually best off if the process is as confusing as possible without preventing me from getting my claim. My sense of right and wrong makes me prefer a transparent process, but I won't turn down extra money if others are unfairly excluded.


  1. Reminds me of Joel Greenblatt's book "You Can Be a Stock Market Genius". He talks of how companies often make spinoff securities very confusing so that people are disinclined to want to keep them. Those insiders know their true worth and load up on them.

    Yes, I know it's incomprehensible that insiders would try to deceive a company's owners, but I'm sure it is exceedingly rare! ;-)

  2. @Gene: I had this experience when a company whose stock I owned raised some extra cash by issuing some new shares. The terms were such that a sensible person couldn't turn them down, but the offering was so confusing that I'm sure many investors ignored it.

  3. Did you ever get your payment? I received the settlement materials but somehow I never filed them. In the past I've never gotten very much out of these things (for example I received just over $9 last year from a settlement involving BAC), but usually I do take the time to do the paperwork.

  4. @Elliot: I haven't heard anything yet.

  5. Still nothing as of this date.....

  6. Nothing as of this date