A judge rules that AOL executives did not commit fraud by buying 14.8 million company shares before the $1 billion sale of the company's patent portfolio to Microsoft.
A federal judge dismissed a lawsuit brought against AOL by some of its former stockholders on Monday. According to Reuters, the former stockholders alleged that some AOL executives committed fraud when they bought millions of company shares before a major $1 billion patent sale to Microsoft.
However, according to Reuters, U.S. District Judge Denise Cote wrote in her opinion, "the complaint's conspiracy theory is mere speculation."
In 2012, AOL and Microsoft struck a deal when Microsoft agreed to pay AOL $1.06 billion to acquire some 800 patents and related applications. AOL said at the time that all of the proceeds from the patents would be returned to shareholders.
"The closing of this transaction represents another major step for AOL in increasing value for our shareholders," AOL chairman and CEO Tim Armstrong said in a statement after the deal was finalized.
According to the complaint filed by the former stockholders, some AOL executives -- including Armstrong and former CFO Arthur Minson -- repurchased 14.8 million shares in 2011 without acknowledging the forthcoming patent deal with Microsoft.
Once the deal went through, AOL's stock skyrocketed 43 percent in one day.
The former stockholders said they sold their shares before the patent sale, since they were unaware of the deal, and therefore suffered substantial financial losses.
Judge Cote said the lawsuit did not prove that AOL executives made a material misstatement or omission before the patent sale and it was well known that AOL could stand to make a lot of money on its patent portfolio.
The media attention and information available at the time "render[s] implausible any suggestion that the public was not aware that AOL possessed an extremely valuable patent portfolio," Cote wrote, according to Reuters.
CNET contacted AOL for comment. We'll update the story when we get more information.