Time Warner squares AOL fraud claims with $510m settlement

Fends off SEC and DoJ

By Tim Richardson • Get more from this author

Posted in Financial News, 16th December 2004 17:52 GMT

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Giant media corp Time Warner has agreed to cough up $510m (£263m) to settle claims that AOL inflated its ad earning revenue.

The company will pay $60m (£31m) in penalties and has agreed to establish a $150m (£77.5m) fund to be used by the US Justice Department to settle any related shareholder or securities litigation.

It's also agreed to splash out a $300m (£155m) penalty to the Securities and Exchange Commission (SEC) to settle that investigation.

Under the terms of a settlement, the DOJ will file a criminal complaint against AOL for the conduct of certain employees in connection with securities fraud but will defer the prosecution of AOL. After two years, provided it keeps its nose clean, the DOJ will dismiss the criminal complaint filed against AOL.

Six weeks ago, Time Warner said it has tucked away $500m (£258m) in legal reserves related to pending government investigations into its financial past. The media giant also announced plans to restate its accounting for its interests in AOL Europe prior to 2002.

The SEC and the DOJ were investigating past accounting and disclosure practices at AOL concerning advertising and the reporting of subscriber numbers. ®