Class Action against Intelsat insiders
March 6, 2023
By Chris Forrester
“Any reasonable person – and juror – would believe that there was insider trading” states a motion from lawyers for the Class Action against some Intelsat shareholders and the company chairman, Dave McGlade, provided their detailed claim for the Northern District of California Court. Their action is due to be heard on April 28th.
The Action argues that the defendants in the case sold shares worth $246 million and thus avoid $185 million in losses but “innocent investors were left [with nothing]”. The Action states each of the named defendants “owed a fiduciary duty to Intelsat shareholders.”
The Action cites precedence and states: “Indeed, investors do not expect the playing field to be level, but they do expect that those who ‘have special access to information, because of employment or other relationships, should be barred from using that information to gain an advantage over the rest of us.”
The events that lead up to the claim state that on the morning of November 5th 2019 a meeting took place with Intelsat’s CEO Steve Spengler at the FCC to discuss Intelsat’s (and SES) C-band proposal for a private auction of some of the satellite companies C-band assets over the US.
At the meeting, however, the FCC reversed course, making “a complete 180” reversal and the Intelsat visitors were told that the FCC would handle its own auction of the C-band frequencies. “Statements from highly placed senior ‘Confidential Witnesses’ and from testimony in Intelsat’s bankruptcy proceeding confirm that the November 5 Meeting had gone terribly,” says the Class Action lawyers.
A few hours later, and on the same day, “high-profile Intelsat insiders—including (i) Intelsat’s Chairman of the Board [McGlade], (ii) BC Partners, Intelsat’s largest shareholder (which was represented on the Board by two directors), and (iii) Silver Lake (another major investor with special information rights)—sold a whopping $246 million in stock through a rushed overnight fire sale, with absolutely no prior approval or oversight from the Board, and no advanced warning that the sale was coming,” states the Action’s claim to the court.
The Class Action states: “On these facts, circumstances, and timeline alone, an appropriate analysis would lead any reasonable person and juror to believe that there was insider trading. Indeed, the above facts—which are undisputed—indicate that when weighing all inferences in favor of the Plaintiff it is ‘at least as likely’ than not that Defendants in this action committed insider trading.”
“The above undisputed facts demonstrate an overwhelming likelihood that Defendants traded while in possession of material non-public information,” argues the Claim.
The Class Action quotes from three ‘Confidential Witnesses’, one an extremely VP-level senior employee of Intelsat, and another a “senior executive” of the C-Band Alliance, corroborated the events, the time-line and how Intelsat reacted.
“On the afternoon and evening, just after this pivotal [FCC] meeting, Defendant McGlade (as Board Chairman) and Intelsat’s largest two shareholders executed a massive $246 million sale of Intelsat stock at a steep 6.6 percent discount to the market price. As the New York Post would later write in a March 4, 2020 article entitled ‘Intelsat’s biggest investors sold shares just before massive stock plunge,’ Morgan Stanley brokered the deal with ‘no advance warning that the sale was coming, and interested buyers were told they had an hour or so to decide,’“ states the claim to the Court.