Shareholder lawsuit filed against Sirius XM Radio Inc. - Orbitcast

Shareholder lawsuit filed against Sirius XM Radio Inc.

| 31 Comments
Sirius XM Shareholder LawsuitA shareholder lawsuit has been filed against Sirius XM Radio Inc. management by a group called "Save Sirius," headed by Michael Hartleib.

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. It seeks to prevent Sirius XM from "further damaging its shareholders with massive amounts of additional dilution" of its stock, which includes the possible 50-to-1 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, which the group claims to have over 500 members.

Hartleib insists that Karmazin intends on taking the company private, citing statements made during a September 2008 Wall Street Journal interview.

"In light of the aforementioned, it is clear that they [Sirius XM Management] have lost sight of their obligations to shareholders and have breached and will continue to breach their fiduciary duties in the future," said Michael Hartleib in a statement. "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."

Read the entire 56-page lawsuit by clicking the link below...

[Download Lawsuit (DOC)]

31 Comments

Not for nothing, but this "lawsuit" has "FAIL" written all over it... Wonder what his ulterior motives are?

Does make you wonder what they hope to gain from this lawsuit. Trying to sue a company like siriusxm will end up in him being bankrupt and nothing else being changed. I dont like the current share price anymore than anyone else but does this guy think MelK spent 2million dollars of his own money just to get people to buy sirius. If mel didnt believe in this company why would he spent so much. He is concerned the company is going private? I guess its possible it could happen but what are the chances? I agree, This says FAIL from the start.

I don't think this lawsuit is a bad thing. What they're looking to do is so far from the interest of shareholders, I'm glad someone is standing up to this crap. I've lost lots and lots of money on this thing, and I'm not happy about it. What I'm mostly unhappy about isn't that a stock went down, but that the reckless behavior and poor management has taken what could have been a stellar combination, and made me a nearly worthless shareholder and a lifetime sirius subscriber with less content than when I started.

The decisions made by management ARE criminal. You can't simply throw your shareholders under the bus. You can't tank a stock in order to make it an attractive private takeover; that's illegal. You can't go spouting off nonsense to industry leaders about your company and its products.

Maybe there isn't enough merit in this lawsuit to find cause, but it will do a few things:

1) Block or prevent the reverse split
2) Delay or prevent the dilution of shares
3) Put management on notice that they are culpable for shit decisions
4) Raise media awareness with how galactically poor Mel's decisions have been after the merger
5) Expose the FCC's actions for being a part of the cause for this quagmire
6) Potentially raise the profile of the company so that financing terms might be subsidized, since the government caused much of this problem

The Spilled McDonald's Coffee lawsuit seemed ridiculous at first, but McDonald's and everyone else won't serve their coffee above 140f now. That coffee was served at 180f and caused third degree burns, and McDonald's was in fact at fault. Most lawsuits seem silly until you start looking into it a little bit. But as ever, the devil is in the details. I think you'll find some merit in these charges. A decision maybe not, but this isn't frivolous by any stretch.

hope it goes all the way as it sure looks like mel has gone out of his way to hurt the REETS that have invested in this company.

This is Excellent News!!! It is about time that "We the Shareholders" of the SIRIUS XM Corporation make a stand! Please let me know how I can become a part of this Lawsuit to save the working class taxpayer.

I have no idea, but if you're looking for ulterior motives, there are plenty to be found in Sirius' history of lying to the FCC about keeping both services intact and lying to customers about same -- even releasing false "post-merger channel lineups" with all kinds of channels that won't even exist anymore to create the smokescreen that listeners will have "a la carte" choice between two varied services -- when their real intent was always apparently to gut one service. Sirius has also used deceptive practices to inflate subscriber numbers, counting cars sitting unsold at dealerships, for instance, to create the false impression that they were catching up to XM in subscriber numbers rather than failing miserably.

So, it's not hard for me to believe there could be chicanery behind the devaluing of this stock so the company can be stolen from shareholders for pennies on the dollar.

Hartlieb. He never gives up, I'll say that for him.

Personally, I'd love to see the company burdened with shareholder suits at this point. Being honest, I no longer WANT to see them succeed. A long, slow, painful death suits me just fine.

After what these two companies did, first to shareholders, and now to listeners, they don't deserve to continue on and they surely don't deserve to realize any success.

In particular, Parsons should come away with nothing. We EXPECT Mel to act like a charlatan, but there was no reason to expect Parsons would cave to Karmazin like he did destroying both shareholders and the quality of the service at the same time.

"This is an action to recover treble damages"

See, they had to bring sound quality into this again!!!

:-P

XM was a mess, and the merger will be a successful improvement in the long term. Cuts needed to take place to elimiate rediculous duplication, that was a result of the two having to "compete" in the past. More cuts are needed. This lawsuit although predictible, and merely reflects shareholder frustration, will not succeed, and the shareholders will begin to see the benefit of the merger in the improving share price first.

This will NOT prevent a reverse split, if needed as a LAST resort--It WILL help to prevent any attempt to take this company private though--I think the lack of communication is a major reason why this lawsuit was filed--Its frustration on the part of us shareholders that Sirius/XM has been so non-existant in the PR dept--Yes, if Mel were to obtain reasonable financing, this would help to lessen fears--and maybe hes working behind the scenes to get it done--but at this point, results matter foremost--I dont think an announcement of even the 3rd quarter press conference date has been released--Pretty pathetic(and yes, im a way down shareholder who loves the service) I would have to believe Mel has a good reputation in the industry up to this point and he wouldnt want to destroy the years he has built it up--Maybe they are entertaining talks with a large company(and thats why so quiet), such as Microsoft or Apple to buy a minority portion of the company in cash--thereby eliminating the debt issues--or is this wishful thinking again on my part?


I always had mixed enotions about the merger. While some good might come out of it one day, I have noticed alot of unhappy subs. While channels being lost and confusing information about radio's and service I am caring less and less. I enjoy my XM but expect the worst when I read about the joined company. I wouldnt be surprised to one day turn my radio on and hear nothing but Sirius service.

I'm all for this suit. After the October bloodbath I gave up all hope of this company being run in the interest of success. The management is trying to take this company down. There is no other possible explanation to the wanton destruction of content. Thanks To M. Hartleib for sticking this out. He may not win but it is about time that someone gave these guys some heat for their actions.

I want to comment positively along the lines of your post, but every-time I say something positive about this Co., it surprises me with its' profound poor performance!

Thus, I'll keep my mouth shut!

But just a few things: Sirius-XM is supposed to be a "media-Co.", so imo, they need to "mediate to their shareholders", what's "going-on"; Their lack of communication is quite frankly, astounding; How could you fall this low in PPS, and not relay any "reasoning"? The only answer is: 1) They are working on bigger plans, 2) They have a destructive agenda to fulfill, or 3) They are dumb and stubborn, un-able to relay their worth, or counter to an un-fair attack...or 4) They realize that nothing they say matters, until there is some green on the balance-sheet!

I hope its the latter! And I hope the next quarterly report proves that profits-are-coming in 2009!

Just so you all know - XM was managed terribly for years. Just terrible. Bad decisions, wasted money and incompetent people in high posts. Everyone thinks that these layoffs will save money...and yes, I guess, in the long run, it will. But I have news for you - the laying off of many over-priced XM employees (and Sirius as well) is going to cost the company MILLIONS!!!! because many of those employees cut, are getting paid a years worth of salary just to be let go - including the acceleration of stock options/grants etc. That money is gonna add up quickly.

Reverse split,etc. may be necessary to avoid going bankrupt. If the company goes BK, share holders lose everything. The law suit maybe complements of a NAB buddy. They will do or say anything.

I'm curious Stack - they killed listeners? I'm still hearing the same music on XM, and the best of Sirius is a nice option.

Maybe it'll change after some of the channels converge, but I doubt it'll make that much of a difference. Was there really that much of a rivalry between the Sirius and XM 70's channels?

They killed shareholders? Maybe, but I don't know of any shareholders in any companies that haven't been killed lately. I think the FCC is more responsible than anyone - they should have quickly killed the merger, or quickly approved it . Is a 6-month deadline too much to ask for a decision on a niche radio service?

This incicate that Sirius shareholders want hope and are not happy with those running the company.

At the current stock price going BK won’t hurt that bad.

I'm with Xcountry, there was a lot of deception about how the merged company would be run, since we're seeing that the post-merger lineups aren't going to be sub-friendly at all, and will surely cut the number of dual subs drastically.

Anonymous, while I'm an XM listener and I enjoy and support its programming style, I agree with much of what you said. I believe the management of that company has to have engaged in overspending. These formats can be mapped out in advance - you hire a consultant to design a channel and then have modestly-paid operators run it. You had on XM under 10 million potential listeners, a fraction of those listening at any given time, with that listening all split up between 150-odd channels. So, you can't have a highly-paid big name program director for every channel. I have no inside knowledge, but my impression of XM is it was run somewhat like a college or private club, where intelligent people got to do cool stuff. Great concept, but you do have to stay mindful of the business realities.

Comming ,a 20-1 reverse split. a good 3rd qtr. report ,positive news ,lots of it.many fwd. splits in the near future. the deal mel has worked out with gs on shorting has made money for siri xm. Money to pay debt down.More shares will be needed as the company plans on growing, big time. Lets get the price up before the split.

>> XM was managed terribly for years.

For the last two years before the merger, absolutely.

Prior to that they were impeccable. They failed miserably by increasing fixed costs in response to SIRI's wild spending. This was a mistake.

But the real failure happened when Mel ran over Parsons like a Mack truck. It was an professional negotiator against a rank amateur and the outcome shows.

There is no way XM would be trading at $1.50/share today without the merger.

big bob I hear yah,big biz,the merger was a big seed planted for the future,don't
Everyone bail now......f$ck michael heartless!!!!

Right - for 2 years or so prior to the merger - XM was run terribly. I didn't meant from day one - but rather, around that same time frame. They brought all these "execs" who didn't do ANYTHING. NOTHING. And they were paid big time - it was almost like they were brought in as a favor with 2 possible outcomes:

1. you can have this job and be paid way more than your worth - ie. free money at our "cool" company...

2. if the merger happens, you'll be paid a year's worth of salary to be gone, plus get grants and options.

I mean really. They did nothing - there were about 4-6 of them. AND, that's not in addition to how every single "manager" was given EVP titles - I mean, really. How many EVP's do you need?

"Hi, I am the EVP of custodial work"
"Hi, yes, I am the EVP of the PA's"

What happened was, when XM got too big for "cool start up" company label, they didn't know what to do - they started to sh*t the bed. They spent money and more money but didn't seem to do it in a smart matter.

I hope it all works out. I am a fan. But, while sirius threw the kitchen sink at howard, XM hired some poo and paid too much for it.

I'm at the point now where I really don't care if Sirius survives. But I think Hartleib is cool that he never gives up just like in the forums. LOL

I say SIRI/XM deserves this, I mean MEL K pumping this stock to everyone and now wants nothing to do with his share price is just criminal! I have been a believer in this company since 2002 but am disgusted with managements lies and cover up's.... not a good way to keep your image positive!

I‘m all for anything that could result in Mel going away. Sirius started going downhill the moment he took over.

I've already resigned myself to dropping my dual subscriptions once they put the "coup de grace" to XM's music lineup in the coming weeks. I loved having the deep playlists and wide ranging genres of music; especially during my long commute from the sticks to the city. But alas, it has come to an end. It's really sad to see SATRAD killed-off this way by a few greedy people. I admit, I was one of those who "drank the Kool-Aid" when this merger was first pitched, but again it's too late now. Mel has his destiny to fulfill.

Its about time SiriusXM goes private. All you speculators out there could rot in hell for all I care.

Delist these idiots already. Their stock has been under $1.00 for almost two months!

Mel must be kissing some serious ass to keep this ship from fianlly going under.

long live FREE FM radio!

Wait....changes....have....to...happpen....after...the...worst...economy...since..1929???

what about all those promises? this company CAN'T CHANGE THEY PROMISED...

We need to have all 900 channels because even though they are not making money there might be 3 people who still want to listed to the 6 1940's channels!!!!


silly people are silly..