Steven Case and Kenneth J Novack, respectively chairman and vice chairman of AOL Time Warner, stand accused of insider trading by one of the media giant’s major institutional investors, the University of California. Also arraigned, along with other top executives, are former chairman and president Gerald M Levin and Robert W Pittman.

All are named in a 184-page complaint filed by the university with the California state court. It alleges that these executives creamed $936 million (€869m; £595.52m) in illegal insider-trading profits, using “tricks, contrivances and bogus transactions” to manipulate AOL's stock price before and after its merger with Time Warner in January 2001.

The vast multi-site university, which has lost over $450 million on its stake in the media giant, also accuses Case and his senior colleagues of concealing the deterioration in AOL’s business to avoid impeding the merger and activate self-enriching stock options.

In addition, the lawsuit fingers the executives for using corporate cash to prop up AOL Time Warner shares after the merger, enabling them to sell stock while hiding weaknesses in AOL's advertising income.

Case formally vacates the AOL TW chair in favor of ceo Richard H Parsons in May. Although retaining a seat on the board, few believe Case will continue in any meaningful executive role after resigning the chair.

The university recently pulled out from a class-action shareholder suit to pursue its own legal case in its home state. Argues general counsel James E Holst: “We believe that AOL Time Warner and its investment advisers must be held responsible for the admitted misstatement of AOL's financial condition.”

Data sourced from: The Washington Post Online; additional content by WARC staff