Ed Bailey/AP

SEC Sues Former AOL Executives

May 19, 2008 11:00 PM
by Mark E. Moran
The SEC files fraud charges against four former AOL executives, and settles charges against four others.

30-Second Summary

The Securities and Exchange Commission today filed civil fraud charges against four former executives of AOL for their roles in an alleged fraudulent scheme that caused the company to overstate its advertising revenue in 2000-2002.   The SEC also entered into a settlement with four other AOL executives, who collectively paid $8 million in fines and disgorgements.

AOL previously reduced its reported revenues for this time period by $1.26 billion, and paid $3.5 billion to settle charges and lawsuits over the matter.

The Complaint alleges that the executives caused AOL to enter into transactions in which AOL indirectly paid customers to purchase advertising they did not want to buy, in order to enable AOL to report revenue that met Wall Street expectations.

The Complaint cites a litany of AOL’s internal e-mails and corporate presentations.  

In February 2007, the SEC entered into a $30 million settlement over the matter with one of the customers, Veritas, and in July 2007, the SEC sued five Veritas executives, and settled with two others.

Headline Links: The SEC and Wall Street Journal Law Blog

Background: AOL's tribulations


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