$83 Million Distribution Begins for Defrauded Shareholders of Gemstar-TV Guide

sec.gov, Jan 05, 2007

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. Read more at sec.gov