For Immediate Release
May 25, 2006
Pennsylvania Funds Reach Settlement with
Time Warner Inc. and Its AOL Subsidiary
HARRISBURG – Today the Pennsylvania Public School Employees’ Retirement System (PSERS), the Pennsylvania State Employees’ Retirement System (SERS), the State Workers’ Insurance Fund and the Tobacco Settlement Investment Board announced a $23 million cash settlement with Time Warner, Inc., its AOL subsidiary, Ernst & Young LLP, and other parties.
The settlement is the culmination of litigation the Funds have been pursuing since February 2004 in the Court of Common Pleas for Philadelphia County. The Funds alleged that the defendants violated both federal and Pennsylvania securities laws by issuing a series of false and misleading statements concerning the business, financial results and operating condition of Time Warner and AOL before, during and after the January 2001 merger of the companies. The Funds alleged that, as a result, they paid artificially inflated prices for their AOL and Time Warner securities.
After payment of fees and costs, PSERS will receive the largest portion of the settlement, $17.4 million. SERS will receive about $275,000. The State Workers’ Insurance Fund will receive about $112,000 and the Tobacco Settlement Investment Board will receive about $75,000. The total settlement amount was allocated according to the loss incurred by each Fund. Payment of the settlement will be made to the Funds within about a week.
Commenting on the settlement, PSERS’ Chairman Roger H. May said: “We filed this lawsuit to maximize our recovery of assets, and we believe that we have done so. We have also sent a strong message to the companies in which we invest that we will uphold our fiduciary obligation to our members and will take legal action against those corporations where warranted.”
A class action suit was also brought against Time Warner and the other defendants. The Funds opted out of the class and will not participate in the settlement recently announced in that class action. The Funds believe that they have maximized their recovery by pursuing and resolving their individual lawsuit.
The Funds were represented by Berger & Montague, P.C., and Trujillo, Rodriguez & Richards LLC, both Philadelphia law firms, the Office of Attorney General Thomas W. Corbett, Jr., the Office of General Counsel and the Funds’ own legal offices.
About the Pennsylvania Public School Employees’ Retirement System
PSERS is the 14th largest public pension fund in the nation and the 21st largest among public and corporate pension funds in the nation. As of March 31, 2005 PSERS had over $57.1 billion in assets and a membership of more than 255,000 active school employees and 157,000 retirees. For more detailed information visit PSERS’ website at
www.psers.state.pa.us.
About the Pennsylvania State Employees’ Retirement System
Established in 1923, SERS is one of the nation’s oldest and largest statewide retirement plans for public employees, with more than 197,000 members. SERS is among the largest public and corporate pension funds, with assets of approximately $29 billion. For more detailed information visit SERS’ website at
www.sers.state.pa.us.
About the State Workers' Insurance Fund
Established in 1915, SWIF provides workers' compensation insurance to Pennsylvania employers. SWIF currently insures over 50,000 employers. It has assets of approximately $1.9 billion. For more detailed information about SWIF visit the Department of Labor and Industry website at
www.dli.state.pa.us and enter the Keyword SWIF.
About the Tobacco Settlement Investment Board
TSIB was established pursuant to the Tobacco Settlement Act of June 26, 2001, and is charged with exclusive control and authority to manage, invest and reinvest money received by the Commonwealth of Pennsylvania pursuant to the Master Settlement Agreement entered into by the Commonwealth of Pennsylvania and leading United States tobacco product manufacturers.
About Berger & Montague, P.C.
Berger & Montague, a Philadelphia law firm consisting of approximately 70 attorneys, concentrates on representing institutional and other investors in complex securities litigation. Over the past 30 years, Berger and Montague has recovered billions of dollars for investors and has served as lead counsel in shareholder actions against Rite Aid, Sotheby's, Sunbeam, Waste Management, IKON Office Solutions, and many others.
About Trujillo, Rodriguez & Richards, LLC
Trujillo Rodriguez & Richards, LLC, with offices in Philadelphia, Pennsylvania, and Haddonfield, New Jersey, practices in the area of complex transactions and litigation, with an emphasis on antitrust, consumer, securities, international, and general business litigation, as well as white-collar criminal defense, public finance, international transactions, government relations, and labor and employment. The Firm and its lawyers repeatedly make headlines for their successful representation of clients in complex matters.