Shareholder Suit Filed Against Sirius XM Radio
It looks as if another step has been taken in what has been a long process for shareholder Michael Hartlieb. Mr. Hartlieb has formed an organization called “Save Sirius”, and has now filed a suit in U.S. District Court in Los Angeles. The suit accuses management of violating the federal Racketeering-Influenced and Corrupt Organizations act, breach of fiduciary duty, and violation of the Sherman Act.
Mr. Hartlieb has been vocal on various situations with regard to Sirius, XM, and the merger for a few years now, and up until recently has been acting on his own with regard to his various concerns. Now, it appears that he has formed an organization of about 500 shareholders that have joined him in his efforts.
According to a press release issued today, which this publication had no prior knowledge of, the current effort is to stop a potential vote at the Sirius XM annual meeting to be held December 18th, on increasing the fully diluted share count to 8 billion, as well on a vote regarding a potential reverse split.
In a statement from the press release, Michael Hartlieb said, “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.”
The press release, as well as the lawsuit, outline what can only be termed as some serious accusations. This publication has seen no “smoking gun” that directly ties the company to certain activities listed in the complaint. There is indeed a lot of circumstantial points that could be theorized about, but whether the theory translates to reality, or can be proven is another matter altogether.
Some of what is alleged as a breach of fiduciary duty simply boils down to a matter of debate.
Save Sirius complains about Sirius XM’s “history of locking their shareholders into the longest merger delay in history,” as well as its “preventing the corporation from seeking alternatives or potential suitors.” The flip side of the argument is that there was no way to know that the merger would become as long and drawn out as it did, and that the best situation would be for a merger of all of the spectrum (between Sirius and XM), rather than one company being absorbed into a mega company such as Google.
Fiduciary duties are a huge responsibility, and any company can only act on what they know at any given point in time. What transpired in the markets over the past few months was likely beyond what almost anyone would have imagined. Personally, the company going private at low level prices such as we currently have is a large concern of mine. There are shareholders who would be hurt by this happening, but there are also shareholders who would benefit. The question is which group is larger, and that is an unknown right now.
My opinion on this matter (and let me be clear that I am not a financial or legal advisor), is that there is not enough concrete evidence to allow some aspects of this suit to ultimately be successful. While the share price is frustrating, an it is easy to look back in hindsight to see that differing actions may have gotten better results, neither will be a smoking gun.
There were a lot of moving parts in trying to get the merger approved, and the financial markets had wild cards that would have been very difficult to predict. Was there a point in time when it may have been better to walk away from the merger? That is a matter of debate. The impact of a failed merger would have had it’s own implications, and certainly there would have been people that questioned the move.
We have not seen the Q3 results as yet, and these will be the first financial results of the merged company that will be made public. Taking a stance on whether the company has breached financial duties without seeing the financial position of the company is a difficult leap for me to take.
What if the numbers are released, and many of the synergies Mel has spoken of are coming to fruition?
What if the recent debt buyouts are a precursor to a very good refinancing of the February debt?
What if the increased float and reverse split options only exist because it is required to satisfy NASDAQ’s requirements (if needed), and the company wants to vote on it now rather than spend additional money to bring about a special vote later on?
What if the company puts out a better third quarter than anyone anticipated, and the market reacts positively?
Simply stated, there are too many what if’s out there at this point for me to participate in an action such as that being brought about by Save Sirius. This is not to say that Save Sirius is right or wrong. It is merely my own opinion. Yes, shareholders have every right to be nervous and concerned. The equity has taken a beating, and many who have been in this equity for a long time have yet to see the reward for their belief in the concept of satellite radio.
Investors need to look at issues from as many angles as possible. They need to determine how comfortable they are under many circumstances, and be prepared for events that many simply never imagined.
The bottom line is that Sirius XM Radio as well as shareholders are all in a difficult situation, and trying times.
Position: Long SIRI
Note:This site had no prior knowledge of the press release or that the suit would be filed today. The author of this article is not a part of Save Sirius, nor a participant in the actions of Save Sirius.
Tyler check your time stamp on the article. Dont know if its your end or the hosting co. Just thought Id let ya know
If they win, and dilation is avoided and the stock is delisted, then the refinanacing will likely fall through, and the people filing the lawsuit will benefit… HOW? 30 cents a share is infinitely more valuable than 0.
NOT TO TAKE UP SPACE HEREā¦
You can view the entire lawsuit at this orbicast link.
you will see download lawsuit doc at bottom of story to read it all.
SORRY disregard previous link…
this is the correct link…
If you are a sheep I think that Mel is a better shepherd than Michael.
But litigate away…
The price drops. Gutsy investors load up.
Litigants probably can’t buy at the discount because that would be a conflict of interest.
Price goes back up. No RS. Then who looks foolish. Just a theory, but time will tell.
Anyone consider that maybe Mel’s silence right now IS in shareholders interest. He just paid down some debt. Michael and his sheep just helped to increase it.
Hmmm…
I share your sentiments Spanyo, 100%
“If you are a sheep I think that Mel is a better shepherd than Michael.”
————–
Ditto that! These sheep are willing to chop off their nose to spite their face. They have zero foresight and zero patience – only blind paranoia and fear.
bought 5000 today at .30…looking to buy more if it drops to .25
Tyler, this isn’t a new lawsuit — but rather the same one that he filed back in August, about 3 months ago at the time the merger closed.
Hartleib is merely just looking to get others to join his current fight, pretty much as I suspected. He’s still fighting over his agenda from way back, but now looking for others to help foot the bill.
Whether you agree with me or not is irrelevant. What is, is that this is not a new lawsuit — but rather just a press release announcing his efforts in his lawsuit filed 3 months ago.
who are the 500? it was pointed out on Yahoo Boards today that the only plaintiff in the lawsuit is Hartleib. I reviewed the linked Orbicast story, above, and the linked copy of the lawsuit, and appears that Hartleib is the only plaintiff. who are the other 499? seems that the press release is a little misleading as it appears as far as I can determine that the only plaintiff is Hartleib, not the other 499 and not Hartleib’s “organization.”
homer is right! it’s an OLD lawsuit. the linked complaint is actually a first amended complaint.
Krypto, My fantasy is for the price to go low enough that I can get as many shares as you. But if that happens you will probably end up with many more.
Win, Mmmmm…fear. (in the voice of Homer Simpson)
May we all get comfortably wealthy.
Let us pray . . .
Mel is great,Mel is good, Let us thank him for our food. Amen
Talk about sheep . . . the real sheep here are the ones being lead to slaughter under Mel Karmazin’s mismanagement.
Bartender . . . another round of kool aid for the boys in the forum tonight; they’re workin-up some real fancy technical charts for us.
Ooh-Fah, the things they don’t teach you at Harvard Business School . . .
We’ll see Roadkill.
Mmmmmm…. Kool-Aid.
I have asked Michael in the forums about his class action suit, never got a straight answer.Copy of one is below that was nevered answered.
Michael
With all due respect for your belief that you were mislead or wronged by Sirius.
The main reason people including myself were talking about a class action suit, was if Mel and company try to drive the stock price down, with reverse splits etc, and then try to take the company private.
Under those conditions I believe you would see a huge uprising from the stockholders to start a class action suit, get an injunction to stop any sale and then pursue it in the courts.
I also believe you see the recent dismay with stockholders as an opportunity to increase your flock to fight a battle that is yesterday’s news and over.
My question to you would be as follows.
If Mel is able to get the fianancing for the Feb note, extended terms on the May and Dec notes which seems to be achiveable.The stock price begins rising, no reverse splits, limited issue of any more stock or none at all?
How much damage are you going to cause SiriusXM? How much costs will SiriusXM have to spend on attorney fees to cover ground they already have with you?
How much will it cost me as a stockholder?
I am here to try and make money, not join a crusade unless it is warranted by current or future actions of SiriusXm mangement that cause harm to the stockholders.
imho
vaporgold
Spanyo is correct.
Anyone who is apart of this group will be hard pressed to buy more shares until this lawsuit is completed due to the fact that they are a part of a group with pending litigation against the company and any buys/sells of equity at this point will constitute insider trading.
Anyone who is a member of this group better be VERY well informed, or distance yourself from this thing because there are potential legal ramifications against you as well. I hope you all reallize this and don’t think you were just signing up for a simple “newsletter”. Anyone that DID sign up for the “newsletter” better start taking evasive action if being a party to a lawsuit was not your intent. As of this point, Micheal Hartlieb is the only person listed as a defendant, so you have time to get out.
Darn it . . and it’s such a good investment that I was hoping to buy more shares; now I will just have to be “very” careful of the potential legal ramifications. Darn, just when I was gonna make a killin in this stock too . . . just when it was about to “pop” on those big Q3 numbers . . . or maybe possibly the Q4 numbers . . . or was it, “knock-on-wood” full year 09?
Eh, I guess even King George had his loyalists in the colonies . . . and they too were warning the rebels to be “very careful” about the repercussions of their actions. Good thing we listened to the loyalists huh? I mean, good thing we distanced ourselves from dumping that tea into the harbor . . .
and I guess now we can officially add Hartleib to the list of excuses for the company’s underperformance
Lets see, there’s the FCC, and then there’s Jim Cramer and ummmm Mark Wienkes. Who am I leaving out? Oh yeah, the NAB (how could I forget them), Georgetown Partners, Sam Brownback, Goldman Sachs etc. etc.
Oh, ahhh, don’t forget Tyler Savery; how dare he have the unmitigated gaul to provide a favorable review of the Slacker . . . it will be all his fault if the holiday retail numbers are bad. Damn him!
Take another peek at the Autoline infommercial . . take a good look at Mel. Not lookin too good these days, huh? Sorry guys, it’s hardball . . . that’s why Mel gets (read: steals) the big bucks.
By the way, I didn’t hear him say EBITDA positive for Q4, did you? What’s that? I didn’t hear ya? Speak up a little . ..
Ya see, when Mel speaks . . . it is not what he says that is important but rather what he doesn’t say or how he contradicts what he said previously.
Yup, “knock-on-wood” Mel we’ll be EBITDA positive for full year ’09. Rub the 4 leaf clover, throw some salt over your shoulder, see a penny pick it up, don’t step on any cracks, walk under any ladders or break any mirrors. Now that is inspiring leadership.
BTW . . . Mel, unseal your deposition from the Brockwell litigation and put all of this dangerous conspiracy talk to rest. Also, some of your loyalists don’t seem to believe that you actually have an interoperable radio on your desk so I was thinking maybe you could invite a few of them up to the ivory tower for show and tell.
Does anyone REALLY think that Mel does not have an interoperable radio on his desk?
He does. Isn’t that why Sirius was found to be in compliance with the FCC order?
Roadkill, are you a shareholder?
Tyler Savery said, “My opinion on this matter (and let me be clear that I am not a financial or legal advisor)”
Then why are you making unqualified comments regarding the merits of the lawsuit? I think it might be a good idea for you to consult with your own attorney before giving anymore of your unqualified legal opinions. You’ve done quite enough of that for the past couple of years and to be honest, you were way off base when you started giving them and you’re still way off base today.
joe…..
You seem to love to give opinions on things you know nothing about. You seem to have an opinion on the balance of my portfolio, yet there is no possible way you know the slightest thing about it.
You seem like you have frusrations. Take a run. It may help you work out some of those issues