Gemstar executive's settlement gives SEC case potential boost.

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 bane review, the commission may have to appeal the case to the U.S. Supreme Court.