Gemstar Executive’s Settlement Gives SEC Case Potential Boost
WALL STREET WEST
Last week’s settlement of civil fraud charges by former Gemstar-TV Guide International executive Peter C. Boylan could help the Securities and Exchange Commission’s case against four remaining defendants.
Boylan, Gemstar’s former chief operating officer, agreed to pay $600,000 to settle charges he participated in a scheme to inflate licensing revenues for Gemstar’s interactive television program guides.
Potentially more important than the money is Boylan’s agreement to cooperate in the SEC’s ongoing case against co-defendants Henry Yuen, Gemstar’s former chairman and chief executive; ex-Chief Financial Officer Elsie Leung; former General Counsel Jonathan Orlick and Craig Waggy, former chief financial officer of TV Guide.
Their trial is scheduled for Jan. 18.
Boylan didn’t admit guilt in his settlement. His attorney, Patricia Glaser, points out that he has been cooperating with the SEC all along.
“It just means that if they want them to be interviewed further he’ll be interviewed,” Glaser said. “He has told the truth all along and he will continue to tell the truth.”
But Michael Piazza, the SEC’s regional trial counsel, said he expects to elicit more detailed information from Boylan after the settlement agreement is finalized.
“We have not sat down and had a detailed discussion with him in the context of the cooperation agreement,” Piazza said.
Meantime, the SEC has asked the federal 9th Circuit Court of Appeals to conduct a full review of a decision made by a three-judge panel of the court in May. The panel reversed a lower-court decision allowing the SEC to freeze $37 million in severance payments granted to Yuen and Leung by Gemstar’s board as part of a severance package.
The SEC contends the amounts are “extraordinary” payments under the Sarbanes-Oxley statute that grants the SEC power to freeze such payments when it believes federal securities law may have been violated.
The lower court agreed, but the 9th Circuit panel sided with Yuen and Leung, saying there was insufficient evidence the payments were “extraordinary.”
The Yuen case is being watched closely because few courts have addressed the question of how far the SEC can go with one of its most powerful new weapons.
“It’s really defining what we can and cannot do under Sarbanes-Oxley,” Piazza said.
If the 9th Circuit declines to grant the en banc review, the commission may have to appeal the case to the U.S. Supreme Court.
Stamps of Approval
The U.S. Postal Service gave Stamps.com Inc. the green light last week to conduct a trial run that allows consumers to design their own postage stamps using their favorite photos.
Santa Monica-based Stamps.com received roughly 2,000 orders for stamps featuring dogs and cats, kids, weddings and travel shots in the first two days the trial service was available on its Web site.
The process of creating a personal postage stamp is simple, but not cheap.
A package of 20 stamps envelopes costs $16.99, which includes $7.40 for the 37-cent stamps, $2.99 for shipping, and $6.60 for photo-quality printing.
A photo takes up about three-quarters of the stamp with the remainder reserved for a bar code and the price.
Customers have to be able to upload a digital photo to the company’s site and use online tools to complete the order. It takes up to a week for personalized stamps to arrive.
Stamps.com expects the PhotoStamps service to receive formal approval from the Postal Service in the next two months.
In March, Pasadena-based Avery Dennison Corp. teamed up with the Postal Service on the same concept. The look is a bit different, though. Avery Creative Postage Labels places a personal photo next to an existing postage stamp with built-in design themes.