Time Warner (formerly known as
AOL
Time Warner)
had also been charged with aiding and abetting three other
securities frauds and violating a
SEC
cease-and-desist
order issued against America Online in 2000.
The company has not admitted or denied the allegations, but
will pay a penalty of $300 million into a Fair Fund, which, as
authorised under the Sarbanes-Oxley Act, is used to compensate
investors hit by corporate financial wrongdoing.
The media giant has also agreed to restate its historical
financial results for the fourth quarter of 2000 through 2002 and
to properly reflect the consolidation of
AOL
Europe in
the company's 2000 and 2001 financial statements.
In addition the company will engage an independent examiner to
determine whether the company's historical accounting for certain
transactions was in conformity with generally accepted accounting
principles. The examiner is due to report to the securities
regulator within 180 days.
According to Time Warner, the company has now restated the
required financial results, but depending on the independent
examiner's conclusions, a further restatement might be
necessary.
Finally, the settlement requires the company to comply with
the Commission's earlier cease-and-desist order against
AOL
; enjoins the company from violating anti-fraud,
reporting, books-and-records, and internal control provisions of
the federal securities laws; and enjoins the company from aiding
and abetting securities fraud.
In a separate administrative action, Time Warner
CFO Wayne H
Pace, Controller James W Barge, and Deputy Controller Pascal
Desroches have been charged with causing company reporting
violations based on their roles in accounting for $400 million paid
to the company by Bertelsmann
AG
in two sets of
transactions.
"The actions against Pace, Barge, and Desroches demonstrate
that the Commission will hold responsible executives and
accountants who fail to take meaningful action when faced with
significant evidence that the accounting is wrong," said James
Coffman, Assistant Director of the Commission's Division of
Enforcement.
"As our investigation continues, we will be turning our
attention to those primarily responsible for the company's fraud
and improper reporting," he added.
A cease and desist order has been put in place against the
three men, prohibiting them from any future violations of reporting
provisions of the securities laws, but no suspension, bar or
penalties have been imposed against them.
They continue to work for the company, according to Time
Warner.
