America’s corporate probity is again under the spotlight as the Securities and Exchange Commission announced Wednesday that it is investigating accounting practices at America Online, the internet unit of the world’s largest media group AOL Time Warner.

According to recently appointed AOL TW chief executive Richard Parsons – himself from Time Warner origins – the SEC is conducting a “fact finding” probe into a range of transactions made at AOL prior to the completion of the AOL-Time Warner merger. The transactions in question, Parsons insists, were “appropriate” and had been appraised by Ernst & Young, the group’s auditors.

Following the announcement, AOL TW stock which ended the day on the NYSE at $11.40, fell by 6% to $10.55 in after-hours trading on Reuters’ Instinet electronic trading system.

In a parallel universe, however, all was rosy at the giant conglomerate which reported robust Q2 growth at its traditional media businesses, more than atoning for the ad slump-driven profits slide at its internet properties. Overall, the company moved back into profit during the quarter, posting net income of $394 million (€394.40m; £249.81m) or 9 cents a share, against a loss of $734m (-7 cents) in the same period last year.

Rallying the troops, Parsons proclaimed: “We will move forward as rapidly as possible with the revitalization of America Online, with particular focus on improving the AOL service and rebuilding its advertising business.”

Data sourced from: Financial Times; additional content by WARC staff