Federal Judge Dismisses Stockholder Lawsuit Against AOL, Inc. (AOL)
On Monday, a federal judge has dismissed a lawsuit filed against AOL, Inc. (NYSE:AOL) by former stockholders. The former stockholders claimed that some AOL executives committed fraud after buying millions of company shares before Microsoft spent $1 billion buying patents from the company.
“The complaint’s conspiracy theory is mere speculation,” stated U.S. District Judge Denise Cote.
Microsoft bought around 800 patents and patent applications from AOL last year for $1.06 billion. AOL said back then that the proceeds from the patents would be returned to shareholders.
The former stockholders said that some AOL executives including chief executive officer Tim Armstrong and former chief financial officer Arthur Minson repurchased around 14.8 million shares in 2011. After the Microsoft deal went through, AOL’s stock price jumped 43% in one day.
The former stockholders said that the shares were sold before the patent sale since they were unaware of the deal and suffered substantial financial losses as a result.
Judge Denise Cote said that the lawsuit does not prove that AOL executives made a material misstatement before the patent sale and that it was well known that AOL could stand to make a lot of money on its patent portfolio.