The news follows a summary judgment ruling from a federal court in Atlanta that held that Gemstar's patent-related claims against satellite-TV broadcaster EchoStar Communications Corp. could not be enforced.
'Widespread and complex scheme'
The former CEO of Gemstar, Henry Yuen, and chief financial officer, Elsie Leung, are being charged for what the SEC alleges are "their roles in a widespread and complex scheme to inflate Gemstar's licensing and advertising revenues." Mr. Yuen and Ms. Leung departed from their posts in September 2002, in a move that allowed Rupert Murdoch's News Corp., which owns a significant stake of the stock, to finally flex some muscle within the company. They retained their seats on the board, though, until March of this year.
The SEC seeks antifraud injunctions, fines, "disgorgement of ill-gotten gains" and a bar against the execs from either serving as officers or directors of a public company.
The earlier court case centered on broad patents gemstar holds on onscreen electronic TV program guides. Gemstar's rivals have insisted those patents aren't enforceable.
Gemstar restated its revenues more than once in the past 12 months.
In response to the charges against Mr. Yuen and Ms. Leung, a company statement said the current management "has, and continues to, cooperate fully" with the SEC investigation. It also pointed out that the two "were terminated for cause" and no longer work for the company.
In response to the summary judgment ruling, the company issued a statement that said the "company intends to take appropriate steps to reinstate its claims against EchoStar."
Gemstar stock closed today at $5.22, down 27 cents.