Washington, D.C., Dec. 22, 2006 – LAWFUEL – US Law – US Law Jobs – The Securities and Exchange Commission today announced that shareholders who were harmed by fraudulent accounting and disclosure practices at Gemstar-TV Guide International, Inc. will begin receiving approximately $83 million in cash and stock to compensate them for their losses. These funds include $22.3 million recovered by the SEC as a result of enforcement actions it brought against Gemstar, four former Gemstar executives, and the audit firm KPMG. The funds also comprise payments by Gemstar and KPMG to settle a related private class action lawsuit.
In its various enforcement actions involving the widespread fraud at Gemstar-TV Guide, the SEC obtained both civil money penalties and disgorgement of ill-gotten gains from certain defendants. The “Fair Funds” provision of the Sarbanes-Oxley Act of 2002 authorizes the SEC to take civil penalties collected in enforcement cases and add them to disgorgement funds, making it possible to provide greater compensation to harmed investors. Before the Sarbanes-Oxley Act, civil penalties obtained by the SEC were deposited in the general fund of the U.S. Treasury.
“Today’s distribution reflects our commitment to use the Fair Funds authority given to us by Congress to return money directly to injured investors,” said SEC Chairman Christopher Cox. “No lawyers’ fees will be deducted from the $22.3 million recovered for investors in the form of penalties and disgorgement. That is exactly what this important feature of the Sarbanes-Oxley Act intended.”
The SEC previously filed and settled actions against Gemstar and its former CFO, co-president, general counsel, and a divisional CFO, as well as against KPMG and four members of the KPMG audit engagement team.
The SEC also filed charges against Henry C. Yuen, the former CEO and chairman of the board of Gemstar. After a three week federal court trial in December 2005, the Honorable Mariana R. Pfaelzer, United States District Judge for the Central District of California, found in favor of the Commission and against Yuen on all claims. The court ordered Yuen to pay a total of over $22.3 million in disgorgement, penalties, and interest, and also entered a permanent injunction against future securities law violations and a permanent bar from serving as an officer or director of a public company. The money judgment against Yuen remains outstanding.
The settlement funds from the SEC enforcement actions and the private class action lawsuit were consolidated under the jurisdiction of Judge Pfaelzer and are being administered by a single claims administrator pursuant to a single plan of distribution. The consolidation of the SEC and private class action settlement funds into a single distribution plan resulted in substantially reduced administrative costs and a more efficient distribution to investors. Although the funds were consolidated, the SEC ensured that no portion of the SEC funds was deducted for attorneys’ fees.
The claims administrator is The Garden City Group, 105 Maxess Road, Melville, NY 11747-3836. Questions regarding the distribution may be directed to The Garden City Group at 1-800-327-3664.