SEC Seeks Review of Gemstar Ruling

The Securities and Exchange Commission on Wednesday asked a federal appeals court to reconsider its decision that may allow Henry Yuen, former chief executive of Gemstar-TV Guide International Inc., to collect $29.5 million in severance that was frozen after the agency began investigating him for possible accounting fraud.

The 9th U.S. Circuit Court of Appeals in San Francisco this month reversed a lower court ruling that had frozen the payout at the request of the SEC.

The decision also may give former Chief Financial Officer Elsie Leung access to $8.1 million in severance.

The SEC sued both former officers last year, accusing them of inflating revenue at the Los Angeles-based firm by $223 million.

The SEC argued that the court decision hindered “an invaluable tool” of the Sarbanes-Oxley Act of 2002. The law has enabled the agency to obtain orders to freeze proposed payouts of more than $200 million to executives under investigation.

The opinion undermines the law’s aim “to permit the SEC to preserve corporate assets on an emergency basis while it quickly investigates whether the intended recipient of an unusual payment has committed securities fraud,” the agency said.

Stanley Arkin, a lawyer for Yuen and Leung, said the SEC petition was expected. He said he didn’t think there was “any rational basis for review here.”