The state alleged that the company misrepresented advertising revenues and growth of AOL along with the number of AOL subscribers, which artificially inflated the stock price to the detriment of investments by state officials including those representing its pension funds.
“Protecting Alaska’s financial assets is a key priority for the state and the corporate scandals on Wall Street in the past several few years required us to seek recovery of the millions of dollars the State of Alaska lost from its investment portfolios,” said Patrick Galvin, Commissioner for the Department of Revenue, in a statement .
The $43.3 million won in the settlement after attorneys’ fees and costs will be split between the Alaska Permanent Fund Corp (60.26%) and the Alaska Retirement Management Board (39.74%), the new state agency that oversees the Public Employees’ Retirement System, Teachers’ Retirement System, and all other state employees’ retirement funds.
Time Warner did not admit any liability or wrongdoing.
The state joined the procession of other institutions suing the media giant for securities fraud in April 2004 (See Alaska Funds Join Time Warner/AOL Suit Parade ), but later pulled out to go it alone. Other states had also filed separate suits in local courts, including the California Public Employee Retirement System (CalPERS). In late February, Pennsylvania, and other states with intentions to sue included Ohio, New Jersey, Minnesota and West Virginia.(See WV Enters AOL Accounting Fraud Fray ).
The company settled with Pennsylvania retirement systems in May for $23 million, far short of the $100 million loss alleged by the plaintiffs (SeeTime Warner Settles with Public Retirement Systems ).