AOL TW faces lawsuit over ‘unconventional’ deals

Class action

By Tim Richardson • Get more from this author

Posted in Music and Media, 19th August 2002 18:07 GMT

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Lawyers in the US have launched a class action lawsuit against AOL Time Warner over allegations that the giant media company misrepresented advertising revenues to the tune of $270m (£177m) through what it describes as a "series of unconventional transactions".

The lawsuit was launched today against AOL TW and "certain of its principal officers" by lawyers Berger & Montague in the United States District Court for the Southern District of New York.

It alleges that AOL issued "materially false and misleading statements about its advertising revenues between Q3 2000 and July 2002.

In a statement those behind the class action also allege that "certain company insiders sold tens of thousands of shares of AOL stock at huge profits while in possession of material adverse non-public information concerning AOL's revenues".

Last month, the Washington Post published an investigation in which it claimed AOL misrepresented its accounts after examining $270 million worth of deals made during 2000 and 2001.

Last week AOL TW announced that it had identified three transactions totaling $49m (£32m) concerning AOL advertising and ecommerce revenues that may have been "improperly recognised".

AOL TW described the $49m (£32m) accounting error as an "insignificant portion of the company's revenue during these reporting periods".

The company continues to review transactions involving its AOL Internet division relating to advertising and commerce revenues.

No one at AOL TW was available for comment at the time of writing. ®