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Lawsuit Alleges XM Execs Violated Securities Laws; XM Says Suit Without Merit

Lawsuit Alleges XM Execs Violated Securities Laws; XM Says Suit Without Merit

XM Satellite Radio says a lawsuit filed in federal court in Washington is without merit.
In a statement today, the law firm of Schatz & Nobel said the suit alleges XM executives violated securities laws by selling their company stock while making misleading claims about the satcaster’s ability to cut expenses as it sought to reach its goal of 6 million subscribers by the end of 2005.
The attorneys, based in Connecticut, seek class action status for the suit, filed Monday in the U.S. District Court for the District of Columbia for those who held XM stock between July 28, 2005, and Feb. 15, 2006.
An XM spokesman told RW Online the company would “vigorously defend the matter.”
In February, as reported here, the company lost a member of its board of directors, Pierce Roberts, over concerns about company spending. XM said then that Roberts had expressed misgivings for some time.
News of the lawsuit comes on the heels of SEC filings by XM stating that it is fielding inquiries from the FCC and the FTC about, respectively, the emissions standards of the Delphi XM SkyFi2 and XM’s marketing practices.
“The (FCC) letter seeks information from us regarding the testing, emissions and other matters relating to this radio,” XM states in its SEC filing. “We are conducting an internal review, and anticipate responding to the letter shortly and cooperating fully.”