Gemstar Payout to Face Review
A federal appeals court said Friday that it had agreed to review whether former Gemstar-TV Guide International Inc. Chief Executive Henry Yuen should collect $29.5 million in severance that was frozen after regulators accused him of accounting fraud.
The U.S. 9th Circuit Court of Appeals in San Francisco granted a Securities and Exchange Commission request that a panel of 11 judges review the case. A three-member panel in May ruled that the SEC could not freeze Yuen’s severance pending resolution of a lawsuit that claims he overstated revenue at the company.
In seeking a new hearing, the SEC argued that the decision hindered “an invaluable tool†of the Sarbanes-Oxley Act. The law, passed after disclosures of accounting fraud at Enron Corp. and WorldCom Inc., now known as MCI Inc., enabled the agency to obtain orders or agreements to freeze payouts of more than $200 million to corporate officers under investigation.
The SEC also is seeking to prevent former Gemstar finance chief Elsie Leung from collecting $8.1 million in severance. The agency’s suit against her alleges that she inflated the firm’s revenue by more than $223 million.
Stanley Arkin, an attorney for Yuen and Leung, did not return a call seeking comment.
The trial of Leung and Yuen is set for February.
Shares of Hollywood-based Gemstar rose 1 cent to $5.73 on Nasdaq.
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