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Shareholder lawsuit targets chairman of satellite operator

On Behalf of | Jan 29, 2021 | Shareholder Disputes |

One of the most difficult problems a business can face is an internal dispute that roils not only management and employees, but the public’s impression of the company. Such deep disagreements sometimes result in litigation, such as a recent case shows.

A California shareholder lawsuit filed days ago in federal court alleges that the chairman of Intelsat – a satellite operator – engaged in insider trading.

The lawsuit’s allegations

The suit claims that the company’s chair, David McGlade, sold Intelsat stock hours after he learned that the FCC (Federal Communications Commission) was going to decide against a deal that would have earned Intelsat billions of dollars.

According to the lawsuit, McGlade and shareholders BC Partners and Silver Lake sold $246 million in stock on the same day they found out that the FCC rejected Intelsat’s proposal to hold an auction of licenses to the government-owned C-band spectrum that would have netted Intelsat at least $7 billion.

Dollars and dates

The alleged insider trade took place on Nov. 3, 2019, when Intelsat stock was trading at approximately $23 per share. Two weeks later, the FCC rejected the C-band auction proposal. Six months after that, Intelsat filed for bankruptcy.

Intelsat stock was at 72 cents per share on Friday, Jan. 15, 2021.

The lawsuit states that “this is the quintessential insider trading case.” According to a recent news report, “shareholders had previously believed that only BC Partners and Silver Lake were behind the trades — claims that resulted in a couple of class-action lawsuits filed against the firms last year.” The new suit expands the legal actions to include chair and former CEO McGlade.