Cash Flow

Another Gemstar CFO Settles Charges

Craig M. Waggy, former CFO of Gemstar subsidiary TV Guide.
Stephen TaubJuly 7, 2006

Another finance executive of Gemstar-TV Guide International Inc. has settled charges with federal regulators.

Craig M. Waggy, former chief financial officer of TV Guide, the largest subsidiary of Gemstar, agreed to a cease-and-desist order and a fine of $25,000 for violating the reporting and record-keeping provisions of the federal securities laws, according to the Securities and Exchange Commission.

According to the SEC, Waggy recognized revenue and recorded certain expenses in violation of GAAP from the quarter ended June 30, 2000, through the quarter ended March 31, 2002.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

“Waggy reasonably should have known, based on information he had received or could have reasonably determined, that the expense or revenue was improperly recorded at TV Guide and that revenue would be improperly recognized, recorded, and reported by Gemstar,” the SEC complaint stated.

TV Guide became a Gemstar subsidiary in July 2000 after a merger between Gemstar, which licensed an interactive program guide for televisions, and TV Guide, which publishes TV Guide. Waggy resigned in May 2002.

As reported on CFO.com in 2003, the SEC filed securities-fraud charges against former Gemstar chief financial officer Elsie Leung and former chairman and chief executive officer Henry Yuen for their roles in a scheme to inflate Gemstar’s licensing and advertising revenues. In February Leung agreed to settle with the SEC and pay more than $1.3 million. Charges are still pending against Yuen.

Late last year, Yuen agreed to plead guilty to separate criminal charges of obstructing a federal investigation, admitting he destroyed documents sought by the SEC, which was investigating accounting irregularities at Gemstar. Under the plea deal, Yuen would reportedly have served six months in home detention and two years on probation, paid a $250,000 fine, and donated $1 million to charities helping low-income victims of fraud. The judge in that case refused to approve the deal, because he considered it too lenient.

In May a federal judge ordered Yuen to pay $22 million to settle civil charges stemming from his role in the company’s accounting scandal. The sum includes penalties, interest, and a return of ill-gotten gains, reported Reuters.