Time Warner settles SEC fraud charges
Time Warner just agreed to pay securities regulators $300 million and restate three years of financial results to settle civil fraud charges stemming from its accounting of online advertising revenues and subscriber counts at its AOL unit.
The settlement with the Securities and Exchange Commission also calls for the world's largest media company to open its books to an independent examiner, which could result in additional restatements.
The settlement closes another chapter in a federal investigation of more than two years into the accounting practices and deal-making at America Online before and after its January 2001 merger with Time Warner.
Time Warner said it had restated financial results for 2000 to 2002 by about $500 million to correct its accounting for deals under scrutiny by the Securities and Exchange Commission (SEC).
The company did not admit or deny wrongdoing as part of the settlement.
The SEC also settled with the company's finance chief, controller and deputy controller, who stood accused of causing false financial reports to be filed in $400 million worth of transactions that Time Warner negotiated with German media company Bertelsmann.
The three men, who were responsible for approving corporate accounting practices, received false information from unnamed insiders and "failed to pursue facts and circumstances" that would have thrown into question the payments in 2000 and 2001, according to court papers.
Chief Financial Officer Wayne Pace, Controller James Barge and Deputy Controller Pascal Desroches are not required to pay fines or face other sanctions as part of yesterday's settlement.
The three men, who did not admit or deny wrongdoing, remain employed at Time Warner, company officials said. Their defense lawyers declined to comment.
SEC enforcement chief Stephen Cutler said the charges in the 29-page complaint detail "a wide array of wrongdoing" at the world's biggest media company, including schemes to inflate advertising revenue and subscriber numbers.