Time Warner Inc., its AOL LLC unit, auditor Ernst & Young LLP and other parties reached a $23 million cash settlement with four Pennsylvania state funds over an allegation that the firms issued misleading financial data that artificially inflated Time Warner and AOL stock prices when the two companies merged in 2001, according to a statement from the state funds.
The $57.1 billion Pennsylvania Public School Employees' Retirement System will receive the largest portion of the settlement, $17.4 million. The balance will go to the $29 billion Pennsylvania State Employees' Retirement System, the $1.9 billion State Workers' Insurance Fund and the Tobacco Settlement Investment Board. All the funds are based in Harrisburg. "The total settlement amount was allocated according to the loss incurred by each fund," the statement said.
The four funds estimate they lost a total of more than $100 million, Evelyn Tatkovski, PennSERS press secretary, said in an interview.
"We filed this lawsuit to maximize our recovery of assets, and we believe that we have done so," PennSERS Chairman Roger H. May said in the statement. "We have also sent a strong message to the companies in which we invest that we will uphold our fiduciary obligation to our members and will take legal action against those corporations where warranted."
Susan Duffy, vice president-corporate communications at Time Warner, said in a statement: "The company has not admitted any wrongdoing in connection with this settlement but is pleased to have put this securities litigation behind it so it can focus on running its business."
The suit was filed in 2004 in the Court of Common Pleas for Philadelphia County.