Lawyers for Time Warner, the company that up until recently was known as AOL Time Warner, may have heard the ubiquitous email chime “You’ve got mail” augmented with “You’ve got a lawsuit.”
Two public pensions last week filed suit seeking over $100 million in damages. The Pennsylvania Public School Employees’ Retirement System (PSERS) and the Pennsylvania State Employees Retirement System (SERS) claimed the media mastodon misled investors.
The Tobacco Settlement Investment Board and the State Workers’ Insurance Fund joined the two pension funds as plaintiffs in the case. The suit was filed in the Court of Common Please for Philadelphia County, and the suit also names Banc of America Securities, Citigroup Global Markets, Ernst & Young, J.P. Morgan Chase & Co. and Morgan Stanley as co-defendants.
The plaintiff’s claim that Time Warner – and those backing its January 2001 merger with AOL – gave false and misleading statements about the financial condition of the companies and violated Pennsylvania and federal securities laws as well as sound accounting and financial practices. The funds claim they paid an inflated price for AOL Time Warner shares and suffered more than $100 million in losses.
PSERS and SERS seek to collect on damages as well as institute new governance procedures designed to prevent future incidences of what they describe as fraud.
PSERS Chair and Pennsylvania State Treasurer Barbara Hafer and SERS Chairman Nicholas Maiale said in a joint statement that the pension funds were dedicated to recover losses from Time Warner and vowed that they would “not be passive victims of corporate fraud.”
Time Warner declined to comment on the lawsuit.
Both PSERS and SERS lost more than $20 billion over the last two years. The state of the public markets prior to late last year has been largely to blame for the losses.
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