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Second Circuit Orders Former Tyco Director to Return $20 Million Payment

January 19, 2012
The U.S. Court of Appeals for the Second Circuit reversed the decision of the Southern District of New York, and ordered Frank Walsh, a former member of Tyco?ÇÖs board of directors to return a $20 million secret payment he received from Tyco in connection with Tyco?ÇÖs acquisition of CIT Group, Inc. Walsh claimed that the board ratified the payment. The court determined that under Bermuda law, Walsh failed to disclose that he stood to personally benefit from the acquisition?Çöa duty he owed to the shareholders, not the board. Thus, once the breach occurred, only the shareholders, and not the board, could effect a release. (Tyco Int'l Ltd. v. Walsh, 10-4526-cv (2d Cir. Jan. 11, 2012)(Summary Order)).
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