Administration March 1, 2007

Time Warner OKs $400M Settlement with Opted Out Institutional Investors

March 1, 2007 (PLANSPONSOR.com) - Five institutional investors including three pension funds have worked out a $400 million settlement with Time Warner in a suit over accounting standards at America Online.
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The largest of the payments, $246 million, will go to the University of California, according to the New York Sun news report. Settlements will be directed to the California Public Employees Retirement System (CalPERS), Amalgamated Bank and two pension funds for Los Angeles County employees.

The five had opted out of a class action settlement of securities fraud. The new payouts could rile some small investors because the institutions claim they are getting vastly better settlements than they would have had they remained in the class, according to the news report.

“We think it’s the largest single opt-out settlement in history,” an attorney for the University of California, Christopher Patti, said. “We think it’s between 16 and 24 times what we would have gotten through the class….It is impressive by any measure.”

In 2005, Time Warner agreed to pay $2.4 billion to resolve a class-action securities suit against the company and $300 million to settle civil charges brought by the Securities and Exchange Commission (See  California, Ohio Pensions File AOL Time Warner Suits ).

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