U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 19694 / May 10, 2006

SEC v. Henry C. Yuen, Civil Action No. CV 03-4376 MRP (PLAx) (C.D. Cal.)

Former Chairman and CEO of Gemstar-TV Guide International, Inc. Ordered to Pay Over $22 Million for Role in Accounting Fraud

The Securities and Exchange Commission today announced that Henry C. Yuen, the former chairman and chief executive officer of Gemstar-TV Guide International, Inc., has been ordered to pay over $22 million for his role in a scheme to defraud investors by inflating Gemstar's licensing and advertising revenues. In addition, Yuen will be permanently barred from serving as an officer or director of a public company.

After a three week trial in December 2005, in the Central District of California, United States District Judge Mariana R. Pfaelzer found in favor of the Commission and against Yuen on all of the SEC's charges. The court found that Yuen had committed securities fraud by making misrepresentations and omissions of material fact about certain Gemstar revenues, that Yuen aided and abetted Gemstar's primary violations of the periodic reporting and record keeping control requirements, and that Yuen lied to Gemstar's auditors.

On May 8, 2006, the court ordered Yuen to pay a total of $22,327,231 in disgorgement, penalties, and interest, and entered a permanent injunction against future securities law violations and a permanent bar from serving as an officer or director of a public company. The court found that Yuen received $10,577,692 in ill-gotten gains from his fraudulent conduct, consisting of (1) $3,022,452 in gross bonus compensation received by Yuen during the period of the fraud, and (2) $7,555,240 in excess trading profit he received by selling Gemstar stock during the period of the fraud. The court ordered Yuen to pay a civil money penalty equal to the amount of disgorgement.

Gemstar is a Los Angeles-based media and technology company that publishes TV Guide magazine and an interactive program guide (IPG) for televisions that enables consumers to navigate through and select television programs. During the relevant period, Gemstar generated revenues from the IPG by licensing the technology to third parties and selling advertising on the IPG. In statements to securities analysts and the investing public, Gemstar repeatedly touted the IPG technology and IPG advertising revenues as the company's future and as the "value driver" of the company's stock, and downplayed expected declines in revenue from TV Guide magazine. When Gemstar announced for the first time that certain of its IPG licensing and advertising revenue may have been improperly recorded, its stock price declined by approximately 37%, causing a market loss in excess of $3 billion.

The SEC's complaint, filed in June 2003, alleges that from June 1999 through September 2002, Gemstar overstated its total revenues by at least $248 million to meet its ambitious projections for revenue growth from IPG licensing and advertising. The complaint further alleges that Yuen directed and approved Gemstar's fraudulent recording of IPG licensing and advertising revenue and approved fraudulent disclosure documents. The complaint alleges that Yuen knew, but did not disclose, that Gemstar was improperly recognizing and reporting licensing and advertising revenue from seven companies and that he participated in fraudulently diverting revenue from one business sector to another to meet sector revenue projections. Additionally, the complaint alleges that Yuen signed false management representation letters to Gemstar's auditors regarding the structure of certain transactions.

The complaint charges Yuen with securities fraud, falsifying Gemstar's books and records, aiding and abetting Gemstar's reporting and record-keeping violations, and making false statements to auditors, in violation of Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(a), 13(b)(2)(A), 13(b)(2)(B) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, 13b2-1, and 13b2-2 thereunder.