A panel of arbitrators has found that the former chairman and CEO of Gemstar-TV Guide International Inc. breached warranties and representations that he made to the company. The arbitration panel is ordering Henry Yuen to pay $93.6 million in fees, damages, and back pay to Gemstar. According to the panel, Gemstar was within legal bounds to fire Yuen in April 2003, because of his misconduct relating to a corporate and management restructuring that took place in 2002. The panel also decided that Yuen is not entitled to the $39.9 million dollars he says that the company owes him because he was displaced as CEO and chairman due to the restructuring.
The ruling by the arbitration panel has rejected all of Yuen’s wrongful termination-related claims. This includes approximately $6.9 million in attorney’s fees that were given to the former CEO, some $6.1 million in salary paid to the former CEO since he was let go, and, for breaches of warranties and representation, approximately $80.6 million in damages. The panel also decided that it agrees with Gemstar’s claim that the Patent Rights Agreement between Yuen and the company will stay effective until 2010.
The judgment means that Yuen is not allowed to receive any more advancement of legal fees or indemnification for any matters related to his alleged misconduct. The panel also decided that Gemstar has the right to another judgment for costs and attorneys fees. The arbitrators will decide what this amount will be at a future date. In the meantime, Gemstar says it will pursue the amounts awarded to them from Yuen.
A lawsuit filed by the SEC in March last year found Henry Yuen guilty of committing securities fraud and violating the federal securities law’s recordkeeping and reporting requirements. The Securities and Exchange Commission also said that, in an effort to fulfill Wallstreet’s expectations, Yuen inflated revenues by hundreds of millions of dollars and gave false information to company auditors.
The U.S. District Court for the Central District of California ordered the former Gemstar CEO to pay a total of $22.3 million in penalties, interest, and disgorgement fees. He may still face criminal charges for his alleged misbehavior.
An attorney for Yuen says that his client will be appeal the SEC ruling first and then appeal the panel’s findings. Yuen claims that he agreed to resign as CEO and chairman if Gemstar would pay him $30.9 for stepping down. The agreement also absolved the former CEO of any losses caused by his actions. Yuen claims he did not engage in any misconduct while working at Gemstar.
At Shepherd Smith Edwards & Kantas LTD LLP our team of attorneys and consultants are experienced in dealing with the securities industries. We have represented thousands of clients across the U.S. who have needed our help as a result of financial losses they experienced because of someone else’s misconduct. Contact Shepherd Smith Edwards & Kantas LTD LLP today to schedule your free consultation.
Related Web Resources:
Former Chairman and CEO of Gemstar-TV Guide International, Inc. Ordered to Pay Over $22 Million for Role in Accounting Fraud, SEC.gov, May 10, 2006
SEC Sues Three Additional Former Senior Executives of Gemstar-TV Guide For Their Part in Financial Fraud, SEC.gov, January 6, 2004