A judge approved a settlement of a lawsuit brought against Time Warner by shareholders that alleged that America Online improperly accounted for revenue in the years preceding and following the companies' merger.Judge Shirley Wohl Kram, from the U.S. District Court for the Southern District of New York, ruled that the $2.65 billion settlement of this class action lawsuit is fair, reasonable and adequate. She also pointed out that the plaintiffs' lead attorney distributed about 4.7 million settlement notifications, but the court only received six objections to the agreement. About 600,000 claimants stand to benefit from the settlement, the judge wrote in the decision entered Thursday.At the heart of the lawsuit is the allegation that AOL fraudulently accounted for advertising sales for fifteen quarters between 1998 and 2002, inflating revenue by at least $1.7 billion and ultimately harming investors and violating securities laws. Time Warner announced in August 2005 that it had reached this settlement and established a $3 billion reserve fund for that and other securities litigation.In February, the Lerach Coughlin Stoia Geller Rudman & Robbins LLP law firm announced it is representing about 100 institutional investors who opted out of this settlement and will be seeking $1.6 billion. That is on top of other institutional investors the firm was already representing and who are seeking about $1.6 billion in damages.When AOL and Time Warner announced their intention to merge in January 2000, the all-stock deal was valued at $350 billion. When the transaction closed a year later, the value was estimated at less than a third of that original price due to the declining value of AOL's stock.As the Internet bubble burst, the merged company, renamed AOL Time Warner, failed to meet the lofty expectations sketched out for it, namely that Time Warner's media assets would help propel AOL into the broadband world, and that AOL's Internet savvy would accelerate Time Warner's growth.As all parties soured on the deal, AOL was dropped from the company's name and its cofounder Steve Case increasingly lost power within Time Warner. He resigned from its board of directors last year and in December, he published a column in which he acknowledged that the merger had been a disappointment and called for AOL to be spun off. The Internet unit recently changed its name to AOL LLC, a decision some view as another attempt by the subsidiary to distance itself from the tumultuous past 5 years.A Time Warner spokeswoman declined to comment on the settlement.