Sirius shareholders sue Sirius XM management over “enriching themselves”

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A group known as Save Sirius has launched a lawsuit against the management of Sirius XM for “unjustly enriching themselves at the expense of shareholders,” according to a press release, released today.

Filed in the US District Court, Central District of California, Southern Division, the case also says that the company also violates the Federal Racketeer Influenced and Corrupt Organizations Act (RICO) and breaches the Fiduciary Duty and the Sherman Act. The plaintiffs seek to prevent the management from further damaging its stock price.

“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," a spokesperson for the Save Sirius Group said in the press release.

"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."

The press release can be found after the jump.

SIRIUS Shareholders File Suit Against SIRIUS XM Radio Management

LOS ANGELES, Nov. 3 /PRNewswire/ — The following is being issued by "Save Sirius":

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 suitors;

— 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.