AOL Time Warner has said that it is under investigation by the SEC. The SEC is examining a number of the company’s transactions that boosted revenues. AOL Time Warner CEO Richard Parsons stated during a conference call with investors that the SEC was conducting a fact-finding inquiry. He went onto say that AOL Time Warner was cooperating fully with the SEC in its investigation.
The SEC is rumoured to be investigating an AOL Time Warner transaction with a UK based entertainment company where advertising was bought instead of an arbitration award being paid during a legal dispute. The commission is also investigating claims that AOL Time Warner switched revenues from one division to another and sold advertisements on behalf of eBay which were then accounted for as AOL’s own revenue.
AOL Time Warner has said that its accountants Ernst & Young signed off all the transactions being investigated by the SEC, as they believed that they all conformed to accepted accounting procedures.