Pension Funds in 2 States Sue AOL
AOL Time Warner Inc. was barraged with new investor lawsuits Friday, as California’s two public pension systems and a number of parties in Ohio claimed that the media giant and its representatives had defrauded shareholders with false accounting.
The growing stack of litigation comes as the Securities and Exchange Commission and the Department of Justice continue to investigate the company’s Internet advertising deals.
The California Public Employees’ Retirement System is seeking more than $250 million in damages in Sacramento Superior Court, and the California State Teachers’ Retirement System is seeking $200 million in San Francisco Superior Court.
Five Ohio pension funds and that state’s Bureau of Workers Compensation also filed suits.
An AOL Time Warner spokesman declined to comment.
The CalPERS suit alleges that the New York-based company inflated advertising revenue by $1.7 billion. It named current and former AOL Time Warner executives as defendants, along with investment banks Salomon Smith Barney Inc. and Morgan Stanley and accounting firm Ernst & Young.
“Because of the magnitude of the fraud perpetuated upon investors, we are filing this suit in California to be in the strongest possible position to aggressively obtain recovery of assets lost through this fraud and deception upon investors,” said Mark Anson, chief investment officer at CalPERS.
The University of California system and the Minnesota State Board of Investment are among investors already suing the firm, whose shares rose 34 cents to $16.74 on the New York Stock exchange. The suits were announced after markets closed.
