Wall Street in Dock As Tyco Scandal Reaches Court

Wall Street found itself in the dock yesterday as two of the most eagerly awaited criminal trials to have emerged from the financial scandals of the past few years got under way.

Dennis Kozlowski, the former chairman and chief executive of Tyco, and Mark Swartz, his former chief financial officer, arrived at the state supreme court in lower Manhattan accused of looting the conglomerate of $600m.

Mr Kozlowski, who had spent the weekend at a reportedly lavish wedding party for his daughter on Nantucket, avoided reporters' questions outside the courthouse, only saying: "We're ready for it."

A short distance away, Frank Quattrone, the former head of Credit Suisse First Boston's once high-flying technology investment banking division, arrived to face charges of obstruction of justice, alleging that he ordered staff to delete emails when he was aware that an investigation into the bank was under way.

As the trials started financial regulators filed a subpoena enforcement action for documents held by former Enron chief executive Kenneth Lay as the wider crackdown on corporate fraud continued.

In its subpoena filing the securities and exchange commission said Mr Lay had refused to turn over certain papers which it claimed "are relevant to matters under investigation". It said they appeared to be corporate documents.

The trial of Mr Kozlowski is perhaps the most hotly anticipated of the two now going on in Manhattan - he is the most senior former executive to appear in court so far.

Prosecutors are likely to rehash details of his extravagant lifestyle, including the introduction of a $6,000 shower curtain and $17,000 umbrella stand as evidence. They were bought to decorate his $17m New York apartment.

Both men in the Tyco trial have pleaded not guilty. They face up to 30 years in prison if convicted. The trial is expected to last for three months. Mr Quattrone has also pleaded not guilty. He faces a maximum sentence of 25 years.

The judge and lawyers representing both sides in the Tyco case will spend the next couple of weeks narrowing down a list of 1,500 potential jurors. People could possibly be excluded if they have lost money on Wall Street.

Supreme court justice Michael Obus warned the jurors that Mr Kozlowski and Mr Swartz should be tried on their own merits and not be used as an example for Wall Street's woes. "We are not here to send a message to anybody," he said. "It's not a case of Enron or WorldCom or any other company you may have heard about. It's not an evaluation of the New York stock exchange or how much corporate executives should be paid."