WASHINGTON, May 8 /PRNewswire/ -- An investor sued XM Satellite Radio Holdings, Inc., ("XM" or the "Company") today in federal court, accusing the company of securities law violations, Berman DeValerio Pease Tabacco Burt & Pucillo announced.
Berman DeValerio (http://www.bermanesq.com/) filed a class action on behalf of shareholders in the U.S. District Court for the District of Columbia. The complaint seeks damages for violations of federal securities laws on behalf of all investors who acquired XM securities from July 28, 2005 through and including February 15, 2006 (the "Class Period").
To receive a copy of the complaint, you may contact the court, call the firm at (800) 516-9926 or go to http://www.bermanesq.com/pdf/XMRadio-Cplt.pdf.
The lawsuit claims that XM and Hugh Panero, its president and CEO, violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. Sections 78j(b) and 78t, and SEC Rule 10b-5, 17 C.F.R. Section 240.10b-5, promulgated thereunder.
According to the plaintiff's complaint, Washington-based XM and Panero violated the federal securities laws by issuing materially false and misleading statements during the Class Period that artificially inflated the Company's stock price.
Specifically, the complaint says the defendants led the market to believe that XM would grow its subscriber base to 6 million by year-end 2005, while lowering two of its "key metrics:" Subscriber Acquisition Costs ("SAC") and Cost Per Gross Addition ("CPGA"). In reality, however, the Company was well aware that costs, especially SAC and CPGA, would skyrocket in the fourth quarter of 2005 due to a $25 million promotional campaign to combat the debut of the popular "Howard Stern Show" on Sirius Satellite Radio, XM's chief competitor.
On February 16, 2006, the Company announced a net loss of $268.3 million for the fourth quarter of 2005, compared with $188.2 million a year earlier. For the full 2005 year, XM's net loss was $666.7 million, compared to $642.4 million in 2004. In addition, the Company announced that both SAC and CPGA were much higher than the market had been led to believe.
The market reacted swiftly to those revelations, sending the price of XM's common stock down 5.03%, from a close of $25.25 per share on February 15, 2006, to $23.98 per share the next day. The Company's stock price fell a further 10.05% to $21.57 per share at the close of trading February 17, 2006, the complaint says.
According to the complaint, Panero and other insiders engaged in highly suspicious stock sales during the Class Period, with Panero selling approximately 413,334 shares, or 98.71% of his personally held XM stock, for approximately $8,841,161. Collectively, Company insiders sold approximately 2,769,516 of personally held XM stock during the fourth quarter of 2005, reaping proceeds of approximately $73,325,009.
If you acquired XM securities from July 28, 2005 through and including February 15, 2006, you may wish to contact the following attorneys at Berman DeValerio Pease Tabacco Burt & Pucillo to discuss your rights and interests.
Jeffrey C. Block, Esq.
Bryan A. Wood, Esq.
Richard Malloy, Esq.
One Liberty Square
Boston, MA 02109
(800) 516-9926
If you wish to apply to be lead plaintiff in this action, a motion on your behalf must be filed with the court no later than July 3, 2006. You may contact the attorneys at Berman DeValerio to discuss your rights regarding the appointment of lead plaintiff and your interest in the class action, or you may submit information online at http://www.bermanesq.com/Securities/Signup1.asp?caseid=572. Please note, you may also retain counsel of your choice and need not take any action at this time to be a class member.
Berman DeValerio Pease Tabacco Burt & Pucillo prosecutes class actions nationwide on behalf of institutions and individuals, chiefly victims of securities fraud, antitrust law violations, and consumer fraud. The firm has 36 lawyers in Boston, San Francisco and West Palm Beach.
Contact: Richard Malloy, Esq., (800) 516-9926
