Fraud-Free Finding Lifts Tyco

Updated from Dec. 30

A report issued late Monday contends that Tyco didn't engage in accounting fraud, despite more than $300 million in accounting errors last year alone.

The long-awaited forensic audit, conducted at Tyco's direction by a high-priced staff led by attorney David Boies, uncovered no evidence that Tyco committed any "systematic or significant" financial fraud that will materially affect its results going forward. Instead, the report laid the profit overstatement at the feet of what it called "aggressive accounting." Investors applauded the finding, sending the stock 10% higher in Tuesday morning trading.

Still, the outcome of the extensive internal investigation -- issued just hours before a promised deadline expired Monday -- lent some support to the loud arguments from Tyco bears who have long challenged the company's accounting and who note that Tyco is still the subject of an inquiry by the Securities and Exchange Commission. ...