Lieff Cabraser Heimann & Bernstein, LLP

Alaska settles with AOL, Time Warner

The state of Alaska has settled a securities fraud case for $50 million against America Online, Inc., Time Warner Inc. and Historic TW Inc. The state filed the lawsuit in 2004 in Juneau Superior Court, claiming that the companies misrepresented advertising revenues and growth of AOL and AOLTW, along with the number of AOL subscribers.

The state claimed the effect was to artificially inflate the stock price of AOL and AOLTW to the detriment of Alaska state investment funds. Under the terms of the settlement, Time Warner did not admit liability or wrongdoing. The lawsuit was filed on behalf of the Alaska Department of Revenue, the Alaska State Pension Investment Board and the Alaska Permanent Fund Corporation. The Alaska funds that invested in AOL, Time Warner, and Historic TW stock include the permanent fund and state pension funds.

Alaska officials estimated losses of $70 million when they filed the lawsuit, said Department of Law spokesman Mark Morones. The Alaska Department of Law retained the law firm of Lieff Cabraser Heimann & Bernstein, LLP, to lead the litigation efforts.

Alaska's new Revenue commissioner, Patrick Galvin, said protecting Alaska's financial assets is a key priority for the state. "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," Galvin said. "Today's settlement represents a substantial recovery of those losses."