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Judge Won't Delay SEC's Gemstar Suit

October 21, 2003|From Bloomberg News

U.S. prosecutors can't temporarily halt a Securities and Exchange Commission case against Gemstar TV-Guide International Inc.'s former top executives, a federal judge said Monday.

The U.S. attorney's office in Los Angeles had sought to suspend the SEC's civil case against former Chief Executive Henry Yuen and former Chief Financial Officer Elsie Leung, arguing that the case might interfere with attempts to bring criminal charges or prosecute others.

Prosecutors said in a court filing this month that four former Gemstar executives were notified that they were targets of a criminal probe of securities fraud.

Yuen and Leung, whom the SEC sued earlier this year alleging that they inflated Gemstar's revenue by $223 million over two years, are two of the targets, according to filings.

"I can't see the reason" to stop the gathering of evidence in the SEC's case, said U.S. District Judge Mariana Pfaelzer in Los Angeles after hearing oral arguments.

Yuen and Leung opposed any delay.

Their attorney, Stanley Arkin, said that U.S. prosecutors didn't want his clients to be able to use the SEC case to prepare a defense for a possible criminal trial that would be based on similar claims.

Prosecutors are concerned that Yuen and Leung "will use discovery in the SEC's case to interfere with the government's investigation," said Christine Ewell, an assistant U.S. attorney.

The SEC had supported the motion by federal prosecutors.

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