Accounting & Tax

Former Gemstar CFO to Pay $1.3 Million

Settles SEC charges that she participated in a scheme to inflate the company's licensing and advertising revenues.
Stephen TaubFebruary 8, 2006

Elsie Leung, the former chief financial officer of Gemstar-TV Guide International Inc., agreed to pay more than $1.3 million to settle civil charges that she participated in a scheme to inflate the company’s licensing and advertising revenues, according to the Securities and Exchange Commission.

Leung, who neither admitted nor denied wrongdoing, will disgorge $600,000 and pay a civil penalty of $750,000. She also agreed to a permanent bar from serving as an officer or director of a public company and from appearing or practicing before the SEC as an accountant.

“Our settlement will punish Leung’s misconduct and help protect investors from future harm,” said Randall Lee, director of the SEC’s Pacific regional office, in a statement. The Associated Press pointed out that the penalty against Leung, who also served as co-president and chief operating officer, is the largest so far against a Gemstar executive.

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In 2003, the SEC filed a complaint alleging that Gemstar, which publishes TV Guide magazine and produces an interactive program guide, overstated its revenues by nearly $250 million to meet ambitious projections. The following year, the SEC fined Gemstar $10 million.

The commission charged that Leung knew, but did not disclose, that Gemstar was improperly recognizing and reporting licensing and advertising revenue from seven companies. The SEC also alleged that she participated in fraudulently diverting revenue from one business sector to another to meet sector revenue projections, and that she signed false management representation letters to Gemstar’s auditors.

Charges are still pending against former Gemstar chairman and chief executive officer Henry Yuen.