Pension funds allege fraudulent accounting

Wednesday, Feb. 25, 2004 | 9:10 a.m.

PHILADELPHIA -- Pennsylvania's two biggest state pension funds sued Time Warner Inc., accusing the world's largest media company of fraudulent accounting and misleading investors before and after it was bought by America Online Inc.

The Pennsylvania Public School Employees' Retirement System and the Pennsylvania State Employees' Retirement System also sued the firm's investment banks -- Morgan Stanley, Citigroup Inc., Bank of America Corp. and J.P. Morgan Chase & Co. -- and its accounting firm, Ernst & Young.

The funds said they filed the suit to recover $100 million in losses from trading in the stock of AOL Time Warner Inc., which changed its name back to Time Warner last year. The allegations are similar to those made in suits brought by other state pension funds, including the California Public Employees' Retirement System.

Time Warner declined comment.

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