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Rosemarie Stumpf, Et Al. V. Tyco International Ltd., Et Al. 03-CV

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Rosemarie Stumpf, Et Al. V. Tyco International Ltd., Et Al. 03-CV LAW OFFICES OF JAMES V. BASHIAN, P.C. FECEIVED -CLER James V. Bashian U. S. DrSTFLCT Fairfield Commons 271 Route 46 West, Suitc F207 7Cc1 .!iL 2L P L: 01 Fairfield, New Jersey 07004 (973) 227-6330 [Additional Counsel for Plaintiff Set Forth Below] UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY ROSEMARIE STUMPF, on Behalf of Herself and All Others Similarly Situated, No. 'frA/,. 3 03 4,1 0 3<tc PIaintiff, CLASS ACTIONCOMPLANT vs. JURY TRIAL DEMANDED NEIL R. GARVEY, L. DENNIS KOZLOWSKI, MARK H. SWARTZ, TYCO INTERNATIONAL LTD., TYCOM LTD., It GOLDMAN, SACHS & CO., MERRILL LYNCH, PIERCE FENNER & SMITH INCORPORATED, and CITIGROUP GLOBAL MARKETS, INC., Defendants. Plaintiff, individually and on behalf of all others similarly situated, by her attorneys, alleges the following upon information and belief, except for paragraph 6, which is alleged upon personal knowledge. Plaintiffs information and belief is based on the investigation of her counsel, including a review of Tyco International Ltd. ("Tyco") and TyCorn Ltd. 's ("TyCom") publicly issued press releases; filings with the Securities and Exchange Commission ("SEC"), including the Prospectus filed with the SEC on July 26, 2000 (the "Prospectus"); news stories, Doc*: 136501 Val 12929 I49 analysts' reports concerning Tyco and TyCorn; and data concerning trades in Tyco and TyCom securities. NATURE OF THE ACTION 1. Plaintiff brings this action as a class action on behalf of herself and all other persons or entities who purchased shares of TyCom common stock pursuant to or traceable to the July 26, 2000 Prospectus to recover damages caused by defendants' violation of the federal securities laws. JtifJ J Cii (sr'I I 3$iSJ 2. This action arises under Sections 11 and 15 of the Securities Act of 1933 (the "Securities Act"), 15 U.S.C. § § 77k and ho, and Section lOb(5) of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. § 78j(b). 3. Jurisdiction is conferred upon this Court by Section 22 of the Securities Act, 15 U.S.C. § 77v; Section 27 of the Exchange Act, 15 U.S.C. § 78aa; and 28 U.S.C. § 1331 (federal question jurisdiction). This Court has personal jurisdiction of the defendants pursuant to Section 22 of the Securities Act, 15 U.S.C. § 77v, and Section 27 of the Exchange Act, 15 U.S.C. § 78aa. 4, Venue is proper in this District because TyCom and Tyco maintained offices in the district during the class period and many of the acts and transactions constituting the violations of law herein complained of occurred within this District, including the preparation and dissemination of materially false and misleading financial statements and corporate documents. 5. In connection with the acts alleged herein, the dcfcndants directly or indirectly used the means and instrumentalities of interstate commerce, including the United States mails and facilities of a national securities exchange. UU IgMia 2 - LJ'•aii.1 6. Plaintiff Rosemarie Stumpf, who resides at 17 Whiting Avenue, Floral Park, New York 11001-1518, purchased TyCom common stock during the Class Period as alleged herein. 7. Defendant TyCoin is a corporation organized and existing under the laws of Bermuda with several offices in the United States. TyCorn supplics undersea fiber optic networks and services and also designs, engineers, manufactures, and installs undersea cable and cable networks. TyCom was incorporated on March 8, 2000 as a wholly-owned subsidiary of Tyco to serve as the holding company for its undersea fiber optic cable communications. 8. Defendant Tyco is a diversified manufacturing and service corporation organized and existing under the laws of Bermuda with offices located throughout the United States. Tyco manufactures, services, and installs electrical and electronic components, undersea I telecommunications systems, and fire protection and security systems. Tyco also manufactures flow control valves, healthcare and specialty products, and plastics. During the class period, Tyco owned 89% of TyCom's common shares outstanding. Tyco currently owns 100% of TyCom's outstanding common stock. 9. Defendant L. Dennis Kozlowski ("Kozlowski") was at all relevant times the Chairman of the Board of Directors and a Director of TyCom, as well as the Chief Executive Officer, the Chairman of the Board of Directors, and a Director of Tyco. 10. Defendant Neil R. Garvey ("Garvey") was at all relevant times the President, Chief Executive Officer, and a Director of TyCom. Garvey also was at all relevant times the President of the Submarine Systems, the Vice President of Tyco, and a Director 6f Tyco. -1- 11. Defendant Mark H. Swartz ("Swartz") was at all relevant times a Director of TyCom. Swartz also was at all relevant timcs the Executive Vice President and Chief Financial Officer of Tyco. 12. The defendants identified in paragraphs 9-11 may be referred to herein as "Individual Defendants." 13. The Individual Defendants each signed the Registration Statement for the Offering, which was materially false and misleading. 14. Goldman Sachs is a Delaware corporation with executive offices located at 85 Broad Street, New York, NY 10004 and which maintains offices in New Jersey. 15. Merrill Lynch is a Delaware corporation with executive offices located at 4 World Financial Center, New York, NY 10080 and which maintains officcs in New Jcrsey. On May 28, $ 2003, the NASD commenced action against Phua Young, the Merrill Lynch analyst who followed Tyco, for a series of research violations committed in connection with his coverage of defendant Tyco. Young was charged with disseminating biased research reports on behalf of Merrill Lynch that contained misleading statements and exaggerated clainis about Tyco and its operations between August 1999 and April 2002, a period of time that includes the Class Period. 16. Citigroup Global Markets, Inc., known as Salomon Smith Barney during the Class Period, is a Delaware corporation with executive offices located at 388 Greenwich Street, New York, NY 10013 and maintains offices in New Jersey. 17. Goldman Sachs,, Merrill Lynch. and Citigroup Global Markets, Inc, acting as Salomon Smith Barncy (collcctivcly, the "Undcrwritcrs"), were co-lead underwriters of the July 26, 2000 initial public offering of TyCom common stock. toc#: 136501 VI $29:14$9 -4- rL4JNTIFFS CLASS ACTION ALLEGATIONS 18. Plaintiff brings this action as a class action pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of Civil Procedure ("Fed.R.CivP."), on behalf of all persons or entities who purchased shares of TyCom common stock pursuant to or traceable to the July 26, 2000 Prospectus, including shares purchased on the open market during the period from July 26, 2000 through October 19, 2001, inclusive (the "Class Period") and were damaged thereby. Excluded from the Class are the defendants herein, officers and directors of Tyco, TyCom, or the Underwriters, members of the immediate family of each of the Individual Defendants, and affiliates of the corporate defendants (the "Class"). 19. The members of the Class are so numerous that joinder of all members is impracticable. While the exact number of Class members is unknown to plaintiff at this time and $ can only be ascertained through appropriate discovery, plaintiff believes there are hundreds of members of the Class. TyCom's common stock was actively traded on the New York Stock Exchange throughout the Class Period. 20. Plaintiff will fairly and adequately protect the interests of the members of the Class. Plaintiff has retained competent counsel experienced in class action litigation under the federal securities laws to further ensure such protection; he is a member of the Class; her claims are typical of the claims of all Class members; and he does not have interests antagonistic to, or in conflict with, those of the Class. 21. A class action is superior to other available methods for the fair and efficient adjudication of this contreversy since a multiplicity of actions could result in an unwarranted burden on the Court system and could create the possibility of inconsistent judgments. Moreover, a class action will allow redress for many persons whose claims would otherwise be Dl 13001 Vcr 22i4$ - 5 - too small to litigate individually. There will be no difficulty in the management of this action as a class action. 22. There are numerous questions of law and fact which are common to the Class and which predominate over any questions affecting individual members of the Class, including: 1. whether the federal securities laws were violated by defendants' acts as alleged herein; 2. whether the Registration Statement and Prospectus omitted to state or misreprescntcd matcrial facts concerning (1) the cxccutive compensation of Tyco's senior management; (ii) Tyco's reasons for having commenced the initial public offering of a minority interest of TyCom common stock; and (iii) the business operations and finances of TyCom; and whether members of the class were damaged by virtue ofheir investments in TyCom common stock during the Class Period, and if so, the appropriate measure of damages. SUBSTANTIVE ALLEGATIONS MUTTEM 23. The Class Period begins on July 26, 2000, when TyCom filed a Registration Statement and Prospectus with the SEC for the initial offering of 61,130,435 shares of TyConi common stock at $32 per share (the "Offering"). Prior thereto, 100 0%, of the-- outstanding TyCom shares were owned by Tyco or its affiliates. 24. Goldman Sachs, Merrill Lynch, and Salomon Smith Barncy wcrc the co-icad underwriters of the Offering. DocL 136501 Vcyj 2929.140 -6- 25. As a result of the Offering, Tyco became the 89% owner of TyComcornrnon stock. False and MiafeadinE Stateet 26. According to the Prospectus, the purpose of the Offering was to finance the design and implementation of the TyCom Global Network, a proposed global undersea fiber optic network which Tyco predicted would "be the most extensive and technologically advanced" network of its kind.
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