Judge Extends Freeze on Gemstar Severance
A federal judge in Los Angeles on Friday ordered Gemstar-TV Guide International Inc. to continue withholding a $37.64-million severance payment from two former top executives who are under investigation for alleged securities fraud.
The Securities and Exchange Commission, when pressed by U.S. District Judge William Byrne for the status of its investigation, said it would conclude the probe of the company’s accounting practices shortly and could file charges against Gemstar founder Henry Yuen and former Chief Financial Officer Elsie Leung.
“It’s the commission’s intent to commence an action within the 45 days if we are going to take action,” said John Bulgozdy, the SEC’s senior trial counsel.
In asking the court to freeze payments for an additional 45 days, the SEC invoked the untested Sarbanes-Oxley Act of 2002, which allows regulators to freeze certain payments to executives under investigation for distribution to shareholders if malfeasance is proved.
The two executives probably will appeal the ruling, said their lawyer, Michelle Rice.
After disclosure of accounting irregularities drove down Gemstar’s stock price and invited the SEC accounting probe, the two executives were ousted from top management and from control of the Gemstar board in October by the company’s largest shareholder, News Corp.
Based in Hollywood, Gemstar publishes TV Guide and produces electronic programming guides.