SEC expands AOL Time Warner probe

With the US’s largest companies facing an SEC deadline to vouch for the accuracy of their accounts, AOL admitted late on Wednesday that questionable accounting practices continued well after the internet company merged with Time Warner in early 2001.

Sources close to the investigation have told the Financial Times that the findings had been passed to the SEC, and that some SEC and Department of Justice investigators were sceptical this would be the last accounting announcement from the company.

Previously, the SEC was probing a handful of deals relating to advertising transactions while AOL was an independent company. But it is now investigating three new transactions totalling $49m that took place after the merger, according to the paper.

AOL is also examining further transactions that may have been improperly accounted for, with the FT reporting that the SEC’s inquiries remain focused on the AOL division.

The chief executives and chief financial officers of more than 900 of the largest US companies had been ordered by the SEC to attest to the truth of their financial statements.

The move was part of wide-ranging efforts to restore confidence in Wall Street after a wave of financial scandals that led to the collapse of Enron and its auditor Andersen and forced WorldCom to file for bankruptcy.

The SEC told the FT on Thursday that almost 600 companies had their sworn statements posted on its website, but that it was still processing others.

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