CHICAGO, July 26, 2002 (PRIMEZONE) -- Much Shelist Freed Denenberg Ament & Rubenstein, P.C. today filed a class action lawsuit against AOL Time Warner, Inc. ("AOL Time Warner" or the "Company") (NYSE:AOL) and certain of its officers and directors in the United States District Court for the Southern District of New York. The shareholder lawsuit is on behalf of all persons and entities who purchased in the open market or acquired through an exchange of securities the common stock of AOL Time Warner during the period October 18, 2000 through July 17, 2002, inclusive (the "Class Period").
The Complaint alleges that AOL Time Warner; America Online, Inc. ("America Online"); Stephen M. Case, America Online's Chairman and CEO before the merger and AOL Time Warner's current Chairman of the Board; Robert W. Pittman, America Online's President and COO before the merger and AOL Time Warner's Co-Chief Operating Officer and board member until he resigned from the Company on July 18, 2002; and J. Michael Kelly, America Online's Senior Vice President and CFO before the merger and AOL Time Warner's current CFO and Executive Vice President, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market. These alleged misstatements had the effect of artificially inflating the price of AOL Time Warner securities.
The Complaint further alleges that during the Class Period defendants failed to disclose promptly and accurately the negative trends in business being experienced by AOL Time Warner and America Online. The Complaint also alleges that defendants caused AOL Time Warner and America Online to improperly recognize advertising revenue. Specifically, the Complaint charges, among other allegations, that:
-- America Online improperly converted a $23 million arbitration
award into advertising revenue;
-- America Online improperly converted another pending litigation,
with Ticketmaster, into $13 million in advertising revenue;
-- America Online sold advertisements on behalf of online auction
company eBay Inc., and improperly booked the sale of eBay's ads as
America Online's own revenue;
-- America Online bartered advertisements for computer equipment in a
deal with Sun Microsystems Inc.;
-- In what one America Online insider termed a "science fiction" deal
to create revenue, America Online counted stock rights as
advertising and commerce revenue in a deal with a Las Vegas firm
called PurchasePro.com Inc.; and
-- America Online renegotiated long-term advertising contracts it
risked losing into short-term gains that boosted its quarterly
revenue.
As a result, the Company's reported financial results and published financial statements were materially false and misleading and violated Generally Accepted Accounting Principles.
On July 18, 2002, The Washington Post published a report, based on statements of former Company employees and confidential documents, which revealed how the Company, and America Online before, were able to consistently report advertising revenue that defied the industry-wide advertising downturn. Within hours of The Washington Post article being published, defendant Pittman resigned from the Company.
AOL Time Warner stock closed on July 18, 2002 at $12.45 per share, down more than 78% from its Class-Period high. The stock fall, however, did not end there because after the market closed on July 24, 2002, AOL Time Warner disclosed that the United States Securities and Exchange Commission is conducting a "fact-finding" investigation into the way the Company's America Online unit booked certain advertising transactions. AOL Time Warner shares opened trading on July 25, 2002 at $9.64 per share.
Plaintiffs seek to recover damages on behalf of all those who purchased or otherwise acquired AOL Time Warner securities during the Class Period. If you purchased or otherwise acquired AOL Time Warner securities during the Class Period, and either lost money on the transactions or still hold the securities, you may, if you meet certain other legal requirements, file a motion to serve as a lead plaintiff. You must file your motion no later than September 16, 2002.
If you wish to discuss your rights and interests, or if you have information relevant to the lawsuit, you may contact Carol V. Gilden or Michael E. Moskovitz at Much Shelist Freed Denenberg Ament & Rubenstein, P.C., by calling a toll-free number 1-800-470-6824, or by sending an e-mail to investorhelp@muchshelist.com. Your e-mail should refer to AOL Time Warner.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. The requirements for serving as a lead plaintiff are set forth in the Private Securities Litigation Reform Act of 1995 (15 U.S.C. Section 78u-4).
Much Shelist's history is one of experience, leadership and results. For more than 25 years, Much Shelist has represented plaintiffs in class action litigation in federal and state courts across the United States. The firm has successfully prosecuted cases involving securities fraud, antitrust violations, consumer fraud, unlawful business practices and insurance company fraud. Under Much Shelist's leadership, class members have obtained judgments and settlements in excess of $4 billion.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.