Question

Tyco International Private Limited is operating in over 60 countries and claims to be the largest

designer and maker of undersea telecom equipment’s. Tyco International is also considered as

world's largest maker and provider of electrical and electronic components; and they are also

maker of fire protection systems and electronic security services.

Tyco's former CEO Dennis Koslowski, former CFO Mark Swartz, and former General Counsel

Mark Belnick were blamed of giving themselves interest free loans that were never approved by

the Tyco board of directors. They were also accused of selling their company stock without

informing investors. Koslowski, Swartz, and Belnick stole $600 Million from Tyco International

through their unapproved incentives.

Tyco also incorrectly accounted for certain executive bonuses they paid, thereby excluding from

its operating expenses the costs associated with those bonuses. As a result of these various

practices, Tyco made false and misleading statements and omissions in its filings with the

commission and its public statements to investors and analysts.

a. In your opinion, what was the outcome of Tyco’s misuse of funds on professional bodies and shareholders? What was the challenging part for SEC in investigating this high profile scandal?

b. What would you suggest to auditing companies and Securities Exchange Commission to take steps to avoid such scams in future?

Your answer should be around 400 words for each question.