BusinessCompany NewsTime Warner pays $300m penalty after SEC inquiry

Time Warner pays $300m penalty after SEC inquiry

Time Warner agrees to $300m penalty, restate financial results and engage independent examiner; while CFO, controller and deputy controller consent to cease and desist order.

The Securities & Exchange Commission has charged Time Warner with fraud, wrongdoing and ‘misapplication of accounting principles’.

Link: Time Warner faces SEC action over accounting practices

The SEC has also charged the media giant with aiding and abetting frauds by others and violating a prior cease-and desist order. CFO Wayne Pace, controller James Barge and deputy controller Pascal Descroches have been charged with reporting violations.

Time Warner, formerly known as AOL Time Warner, has agreed to pay $300m (£158m) in civil penalties, ‘without admitting or denying the allegations in the complaint’, according to the SEC.

The three executives have agreed to a cease-and-desist order that found they caused reporting violations by Time Warner based on their roles in accounting for $400m paid to the company by Bertelsmann in two sets of transactions, ‘without admitting or denying the allegations’.

The SEC also charged Time Warner with failing to comply with a previous cease-and-desist order that was issued in 2000 for violating reporting and books-and-records provisions. Time Warner violated this order by ‘artificially inflating its online advertising revenue and the number of AOL subscribers, as well as its failure to consolidate AOL Europe’s financial statements’.

‘Our complaint against AOL Time Warner details a wide array of wrongdoing, including fraudulent round-trip transaction to inflate online advertising revenues, fraudulent inflation of AOL subscriber numbers, misapplication of accounting principles relating to AOL Europe, and participation in frauds against the shareholders of three other companies,’ said Stephen Cutler, director of the commission’s division of enforcement.

In a damning statement, the SEC said: ‘Some of the misconduct occurred while the ink on a prior commission cease-and-desist order was barely dried. Such an institutional failure calls for strong sanctions.’ Time Warner chairman and chief executive Dick Parsons said: ‘We’re pleased to have resolved the SEC’s investigation of the company based on the proposed settlement announced late last year.’

Related Articles

BDO replaces Deloitte as Mitie auditor

Audit BDO replaces Deloitte as Mitie auditor

3m Emma Smith, Managing Editor
CVR Global appoints partner in London office

Company News CVR Global appoints partner in London office

7m Alia Shoaib, Reporter
FTSE100 failing to provide adequate ethics information

Company News FTSE100 failing to provide adequate ethics information

7m Alia Shoaib, Reporter
Moore Stephens recruits new private client partner

Accounting Firms Moore Stephens recruits new private client partner

10m Emma Smith, Managing Editor
Magma Group announces merger, partner promotions

Accounting Firms Magma Group announces merger, partner promotions

10m Emma Smith, Managing Editor
BDO on ‘recruitment spree’ with multiple partner appointments

Accounting Firms BDO on ‘recruitment spree’ with multiple partner appointments

10m Emma Smith, Managing Editor
Brand strength leads to fee income growth for RSM

Accounting Firms Brand strength leads to fee income growth for RSM

10m Emma Smith, Managing Editor
Mazars strengthens audit team with partner appointment

Accounting Firms Mazars strengthens audit team with partner appointment

10m Emma Smith, Managing Editor