If you are one of the hundreds of thousands of investors following penny stocks and low-priced stocks such as SIRIUS XM Radio Inc. (NASDAQ: SIRI), then you will not be surprised to learn that more than 500 shareholders are going after SIRIUS XM’s management.
According to a press release, the group is using racketeering laws lawsunder the RICO Act, breach of fiduciary duties, and the Sherman Act.
The goal is to oust management and to prevent further dilution anda possible reverse stock split. It may also prevent Mel Karmazin frombeing able to take the company private as some reports and speculators havediscussed.
Based upon the horrible share price performance and questions over whether or not Sirius will be able to keep its stock exchange listing, itis really difficult to think that a large shareholder group won’t be able to be ignored by the company or by themedia to force at least some of the changes.
Jon C. Ogg
November 3, 2008
Below is a copy of the full release which was sent directly to us from the "Save SIRIUS" source.
SIRIUS Shareholders File Suit Against SIRIUS XM Radio Management
LOS ANGELES, Nov. 3 /PRNewswire/ — The following is being issued by
A group of incensed shareholders, over 500 strong and growing, have
banned together and accused SIRIUS XM management of unjustly enriching
themselves at the expense of shareholders.
A derivative suit on behalf of shareholders has been filed in the
United States District Court, Central District of California, Southern
Division. Case number SACV08-00790CJC
The case accuses management of violations of the FEDERAL RACKETEER
INFLUENCED AND CORRUPT ORGANIZATIONS ACT (RICO), BREACH OF THE FIDUCIARY
DUTY AND THE SHERMAN ACT.
This suit seeks to prevent management from further damaging its
shareholders with massive amounts of additional dilution (8 billion shares
in the fully diluted float) and as much as a 1 for 50 reverse stock split.
"We are working to gain control of our company by seeking to remove
current members of the board as well as top executive Mel Karmazin," said
Michael Hartleib on behalf of Save Sirius and its members. In a September
15th 2008 Wall Street Journal article written by Sarah McBride, she states,
"Given Sirius XM’s low stock price, Mr. Karmazin said he would love to take
the company private. But given the state of the credit markets, ‘How do you
find [the money] today?’ If the company were generating positive cash flow,
which he expects it to do for the full year in 2009, privatization would
become much more feasible, he says."
It is clear that management under Mr. Karmazin’s leadership has an
agenda to steal this company from its shareholders.
Given Management’s history of:
— Locking their shareholders into the longest merger delay in history;
— Preventing the Corporation from seeking alternatives or potential
— Failing to commercially introduce interoperable radios;
— Their insistence on going forward with the merger at any and all costs;
— Consummating the merger issuing 300 million shares to the financiers of
XM’s debt to be sold short on the open market
Mr. Karmazin and the board have severely damaged shareholder value in
violation of their fiduciary duties. Shareholders have lost over 90% of
their value under Mr. Karmazin’s leadership.
"In light of the aforementioned, it is clear that they have lost sight
of their obligations to shareholders and have breached and will continue to
breach their fiduciary duties in the future. We, as a group, will not stand
for this and will use any means possible to prevent and preclude them from
stealing this company from its rightful owners — we the shareholders,"
said Michael Hartleib, on behalf of Save Sirius and its members.