The suit has been filed by shareholder Kenneth McClure, who held 10,680 shares in AOL Time Warner.
It seeks to represent holders of AOL shares between 19 July 1999 and those whose stock was converted to AOL Time Warner between 11 Jan 2001 and 17 July 2002.
McClure is claiming unspecified damages for the alleged fraud and crash in value of AOL Time Warner shares, which have fallen about 70% this year.
In the suit, filed in a federal court in Texas, he claims advertising revenue was a vital factor in investors’ decisions to purchase and hold AOL Time Warner stock.
The company says its accounting procedures have been audited and are in line with accepted practices.
‘We haven’t seen the lawsuit but all company accounting has been appropriate and in accordance with generally accepted accounting principles and we have provided our investors with all appropriate material information about our business,’ an AOL Time Warner spokeswoman told Reuters.
Earlier this month, reports in the US revealed AOL Time Warner was being investigated by the US Justice Department over its accounting practices, soon after the media giant admitted to a similar probe by the Securities & Exchange Commission.
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