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US pension funds sue AOL Time Warner
San Francisco, July 19: Two of the largest US pension funds filed suit against AOL Time Warner Inc on Friday, alleging the media giant inflated its stock price by overstating its revenues.
San Francisco, July 19: Two of the largest US pension funds filed suit against AOL Time Warner Inc on Friday, alleging the media giant inflated its stock price by overstating its revenues.
Calpers, the California Public Employees' Retirement System, which is the largest pension fund in the country, filed a $250 million lawsuit, while a spokeswoman for Calstrs, the California State Teachers' Retirement System, and the third largest US pension fund, said it sued to recover "about $200 million."
A representative for AOL Time Warner could not be immediately reached for comment.
Further details of the Calstrs lawsuit were not immediately available, however Calpers said that its lawsuit, filed in Superior Court in Sacramento County, related to alleged accounting irregularities at AOL before and after its 2001 merger with Time Warner.
The lawsuits come on top of at least 30 shareholder lawsuits that have been filed against the media and Internet conglomerate.
Calpers said its lawsuit alleges that advertising revenue at the company's AOL Internet division was overstated by at least $1.7 billion, through the use of sham transactions and improper accounting practices, both before and after it merged with Time Warner.
AOL and Time Warner agreed to merge in January 2001 in a deal valued at $106.2 billion. However, amid growing scrutiny into its accounting practices, the company said last year that it would restate results for the prior two years and reduce revenue by some $190 million.
Calpers said it brought its lawsuit against AOL Time Warner, America Online Inc. and current and former executives including Stephen Case, Gerald Levin, Robert Pittman and David Colburn. The suit also names Salomon Smith Barney Inc., Morgan Stanley and Co. and Ernest and Young Llp as agents involved in the merger.
AOL Time Warner posted a 2002 loss of nearly $100 billion -- the largest annual loss in US corporate history -- much of it as a $45 billion charge to write down the value of its America Online business and other assets.
Calpers is an active watchdog on corporate governance and reform. In 1999 it joined two New York-based pension funds to recover more than $2.8 billion in a securities class action lawsuit against the real estate and lodging company, Cendant Corp, in the largest shareholder recovery ever.
Earlier this year Calpers withheld its vote in an election to approve AOL Time Warner's board of directors, saying not all the directors were independent.
AOL Time Warner shares closed at $16.74 per share, up 34 cents on Friday. The stock has lost more than 70 per cent from a peak of $56.15 in May of 2001 but has about 28 per cent so far this year amid a broad rally in the US equity market. Bureau Report
A representative for AOL Time Warner could not be immediately reached for comment.
Further details of the Calstrs lawsuit were not immediately available, however Calpers said that its lawsuit, filed in Superior Court in Sacramento County, related to alleged accounting irregularities at AOL before and after its 2001 merger with Time Warner.
The lawsuits come on top of at least 30 shareholder lawsuits that have been filed against the media and Internet conglomerate.
Calpers said its lawsuit alleges that advertising revenue at the company's AOL Internet division was overstated by at least $1.7 billion, through the use of sham transactions and improper accounting practices, both before and after it merged with Time Warner.
AOL and Time Warner agreed to merge in January 2001 in a deal valued at $106.2 billion. However, amid growing scrutiny into its accounting practices, the company said last year that it would restate results for the prior two years and reduce revenue by some $190 million.
Calpers said it brought its lawsuit against AOL Time Warner, America Online Inc. and current and former executives including Stephen Case, Gerald Levin, Robert Pittman and David Colburn. The suit also names Salomon Smith Barney Inc., Morgan Stanley and Co. and Ernest and Young Llp as agents involved in the merger.
AOL Time Warner posted a 2002 loss of nearly $100 billion -- the largest annual loss in US corporate history -- much of it as a $45 billion charge to write down the value of its America Online business and other assets.
Calpers is an active watchdog on corporate governance and reform. In 1999 it joined two New York-based pension funds to recover more than $2.8 billion in a securities class action lawsuit against the real estate and lodging company, Cendant Corp, in the largest shareholder recovery ever.
Earlier this year Calpers withheld its vote in an election to approve AOL Time Warner's board of directors, saying not all the directors were independent.
AOL Time Warner shares closed at $16.74 per share, up 34 cents on Friday. The stock has lost more than 70 per cent from a peak of $56.15 in May of 2001 but has about 28 per cent so far this year amid a broad rally in the US equity market. Bureau Report