An agreement by Tyco International Ltd. to settle shareholder lawsuits in a massive corporate fraud case puts the industrial conglomerate on firmer ground as it prepares to split into three companies.

Tyco said Tuesday it had agreed to set up a $2.975 billion cash fund to pay claims filed by shareholders against the company arising from actions by ex-chief executive L. Dennis Kozlowski and other top officers convicted of looting Tyco and inflating its value.

The company said it would take a charge of that amount during the current quarter. Tyco spokesman Paul Fitzhenry said the company also would pay interest on the $2.975 billion and turn over half of any money it recovers from ongoing lawsuits against Kozlowski, former Chief Operating Officer Mark Swartz and former board member Frank Walsh.

"With this settlement, we are taking an important step to resolve our most significant remaining legacy legal matter," Chairman and Chief Executive Ed Breen said in a statement. "Our balance sheet and cash flow remain strong and will allow us to readily absorb these costs while removing much of the uncertainty around legacy legal matters."

Investors, including union and state pension funds and Tyco retirees, were permitted last summer to proceed with a consolidated class-action lawsuit in the U.S. District Court in New Hampshire, where Tyco was formerly headquartered. The settlement still must be approved by the largest shareholders and the court.

The settlement covers shareholders from December 1999 to June 2002 and, in some of the consolidated cases, investors who owned stock starting in October 1998, the company said.

Tyco's share price rose 19 cents to $32.38 Tuesday.

Tyco is breaking up into three publicly traded companies: Tyco Healthcare, which will be renamed Covidien and based in Mansfield, Mass.; Tyco Electronics, to be based in Berwyn, Pa., near Philadelphia; and Tyco International, which will remain in New Jersey and include the fire and security and engineered products units. The breakup has been delayed twice, but is now slated for the end of June. Each company will assume a portion of the settlement debt.

Lawyers for the shareholders said the settlement would top $3 billion with interest, making it the largest payout ever by a single corporate defendant in a securities fraud lawsuit.

"This is a fantastic resolution and closes a chapter on one of the largest and most appalling examples of corporate fraud in U.S. history," said Jay Eisenhofer, managing partner at Grant & Eisenhofer.

Total settlements involving securities fraud lawsuits against Enron Corp. ($7.1 billion) and WorldCom Inc. ($6.1 billion) were larger, but those companies are now bankrupt and the payments were made primarily by outside co-defendants including investment banks and auditors. Cendant Corp. agreed to settle a shareholder lawsuit for $2.83 billion in December 1999.

"This is a settlement of historic proportions for the investors who suffered significant financial losses and it also sends a strong message to those who would engage in this type of misconduct in the future," said Richard Schiffrin, of Schiffrin, Barroway, Topaz & Kessler.

Shareholder claims against the company's former auditor, PricewaterhouseCoopers LLP, are still pending, so the total amount recovered by shareholders could be larger, Eisenhofer said. Tyco also has agreed to assign its claims against PricewaterhouseCoopers to the shareholders, who will pursue them "vigorously" alongside the shareholders' existing claims, Eisenhofer said.

"The fraud couldn't have taken place without them. They totally abdicated their responsibility as independent auditor, and had they performed as they should have, this fraud wouldn't have taken place," he said.

PricewaterhouseCoopers spokesman David Nestor declined to comment.

The portion of the settlement that will go toward attorneys' fees has not been determined yet because that portion of the lawsuit is still pending, Eisenhofer said.

Kozlowski and Swartz were convicted in a New York State court in 2005 of multiple counts of grand larceny, conspiracy, securities fraud and falsifying business records.

Prosecutors said the two conspired to defraud Tyco of $600 million to fund their extravagant lifestyles. They were sentenced in September 2006 to eight to 25 years in prison. A judge refused to release them on bail while they appeal.

The shareholders' lawsuits alleged the company misrepresented the value of Tyco and companies it acquired under Kozlowski's leadership in a giant accounting fraud scheme, causing losses estimated at $1 billion to $2 billion.

Tyco makes everything from telecommunications equipment to home alarm systems. The company, which is registered in Bermuda, was run from Exeter at the time of the alleged fraud. It now operates from West Windsor, N.J.

Fred Anderson, Apple Inc.'s former chief financial officer, has agreed to settle with the Securities and Exchange Commission on his alleged part in backdating stock options, according to reports on Tuesday.

Anderson will pay a $150,000 fine and repay option gains of about $3.5 million, but won't admit to any wrongdoing and won't be barred from serving as a corporate officer or on the board of public companies, the Wall Street Journal and Bloomberg News both reported, quoting unnamed people familiar with the case.

They also reported that the SEC is expected to pursue a civil lawsuit against the company's ex-general counsel Nancy Heinen on similar charges.

The Journal said one of Heinen's attorneys, Cristina Arguedas, said her client didn't backdate and will defend herself. It said Apple and an attorney for Anderson declined to comment on the reported settlement.

An Apple probe cleared Chief Executive Steve Jobs of any misconduct in the backdating of stocks at the Cupertino-based maker of computers and music players. While Jobs recommended "favorable" dates for some options, the Apple panel said he was unaware of the accounting implications of his actions and didn't financially benefit from them.

Calger faced up to five years in prison under his guilty plea; the government still has the right to re-prosecute the issue. Calger is the second individual to withdraw a guilty plea in the Enron scandal; former Arthur Andersen accountant David Duncan withdrew a plea in December 2005 after the US Supreme Court overturned Anderson's obstruction of justice conviction.

Since November 2004, Enron has returned about $11.5 billion to creditors in twice-yearly distributions, in April and October, as well as in "catch-up" distributions paid on an interim basis every two months. Monday's distribution was its 15th to creditors, the company said.

Enron, once the nation's seventh-largest company, entered bankruptcy proceedings in December 2001 after years of accounting tricks could no longer hide billions in debt or make failing ventures appear profitable. The collapse wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans.

Enron founder Kenneth Lay and former chief executive Jeffrey Skilling were convicted last year for their roles in the company's collapse. Skilling is serving a sentence of more than 24 years. Lay's convictions for conspiracy, fraud and other charges were wiped out with his July death from heart disease.

"Today's distribution is another significant milestone in the liquidation process and represents a tremendous financial outcome for the Enron estate," said John Ray, president and chairman of the board. "The estate continues to focus on its principal mandate to sell remaining assets, settle claims, and prosecute litigation."

Monday's distribution consisted of about $1.7 billion in cash and $171.7 million in shares of Portland General Electric, Enron's former utility.

Goldman Sachs Groupdelayed until April 11 a vote on a shareholder's proposal to prohibit issuance of new stock options to executives. At its annual meeting Tuesday morning, shareholders overwhelmingly defeated two other proposals the company opposed regarding its charitable contributions and environmental policies.

Goldman delayed the options vote because the proposal was left out off the Feb. 21 proxy document sent outlining the annual meeting agenda. Goldman on March 19 sent shareholders an amended proxy with the proposal.

Goldman Chief Executive Lloyd Blankfein apologized to longtime corporate governance gadfly Evelyn Y. Davis, who made the proposal, for losing it. Davis had addressed it to former Goldman Chairman and CEO Henry Paulson rather than to Blankfein, who assumed the top posts last June. (Davis suggested at the meeting that Goldman fire its corporate secretary for the mishap.)

The proposal would bar Goldman from granting options to "anyone" because the awards "have gone out of hand in recent years," Davis's proposal says, and create distortions in managing the company because options can be tied to short-term earnings gains. Goldman's directors oppose the plan because it would put the investment bank "at a disadvantage in retaining, motivating and recruiting employees," the proxy said. Blankfein on Tuesday said the company needs both stock grants, which Davis supports, and option grants to successfully compete.

Blankfein was paid $54 million last year, including 209,228 options that the proxy statement valued at $10.5 million. His two lieutenants - Presidents Gary Cohn and Jon Winkelried - each collected options valued at $10.3 million. The trio collectively received about 21% of all options Goldman granted employees last year.

Net income at Goldman rose 70% in 2006 to a Wall Street record of $9.4 billion while its stock price soared 56%. Blankfein's compensation rose 42%.
As of the end of last November, the 52-year-old executive held $63.2 million of options that he had not yet converted into stock, according to the proxy statement.

A Goldman shareholder earlier this month filed a lawsuit against claiming the bank awarded too many options to top executives because it miscalculated their worth under the Black-Scholes valuation model it uses. The lawsuit against the firm and its directors seeks to void the election of directors at the meeting and to require a new accounting of the options.

Options granted the firm's top five executive officers in 2006 are worth $23 million more than Goldman disclosed in its proxy statement, the lawsuit said.
A Goldman spokesman said the company will "vigorously contest" the lawsuit.

On Tuesday, about 93% of voting shareholders approved electing all the bank's directors to one-year terms. Fewer than 7% voted for proposals from politically conservative interest groups that would have required a semiannual accounting of its charitable contributions and, separately, a policy paper explaining its environmental policies. A representative of the National Legal and Policy Center, which sponsored the charitable donation proposal, lashed out at Goldman on Tuesday for donating funds to Rainbow Push and other organizations led by Rev. Jesse Jackson.

In other matters, Blankfein said Goldman expects to raise $19 billion to $20 billion in its new private equity fund. The fund is about to be closed, and the amount raised is more than double money raised from outside investors and the firm itself in any of its five earlier private equity funds.
In another private equity discussion, Blankfein said Goldman maintains good relations with The Blackstone Group, despite the bank's absence from the underwriting group leading the private equity firm's initial public offering. Goldman sometimes can't do deals because of conflicts, he said.

He also defended Goldman's growing commitment of its own capital to trading and investing, saying the increased risk has been justified by supersized gains in capital and profits in recent years. The proprietary activities do not jeopardize relations with corporate clients because Goldman maintains "very very strict, high impermeable walls" between its client and proprietary activities to avoid conflicts of interest, he said.

He cited its status as Wall Street's biggest merger advisor and raiser of equity as testament to clients' loyalty.

Blankfein said he opposed government regulation of hedge funds because of the difficulty in creating "sensible regulations" for firms that rely on the funds' "very nimble" trading strategies. Goldman has no direct investments in hedge funds, but provides trading services and short-term loans to the funds through its large prime brokerage business. Goldman also manages almost $200 billion of its own and clients' money in alternative investments such as private equity and hedge funds, he said.

Fielding questions from shareholders on other issues, Blankfein said Goldman has no plans to split its stock, which currently trades at more than $200 a share, or close down its stock specialist operations on U.S. exchanges.

Shares of Goldman were down $1.36 to $210.37, or .6%, in early afternoon trading on The New York Stock Exchange. Shares of its largest competitors were off by about 1%.

LipidLabs  announced the approval of its corporate governance guidelines for its management and board of directors. The Company has approved a code of conduct and code of ethics, as recommended by the Sarbanes/Oxley Act. In addition, the Company is currently seeking to add independent directors to its Board of directors and audit committee. Board Members serve the interests of the Company and its stockholders as highly qualified candidates with the personal integrity, knowledge, skills, expertise, diversity of experience, ability to make independent analytical inquiries, understanding of the Company’s business environment and willingness to devote adequate time and effort to serve as members of the Board.

"We have initiated a program of corporate compliance intended to create a strong corporate governance function within LipidLabs," stated President Tommy Cloud. "We view corporate governance as an essential protection for our shareholders and as an essential support for the universities from whom we license our new technologies. Each stakeholder needs to know that good corporate governance controls are in place as we develop a culture of transparency at LipidLabs," he added.

The US Attorney's announcement comes less than two weeks after Apple completed an internal probe into alleged stock option manipulation by its senior managers, including Jobs. The report purported to clear its executives of any wrong-doing and concluded that Jobs did not "financially benefit" from stock options.