Nikola Motors: Possible insider trading?
The chairman of the board of directors of the satellite operator Intelsat has been sued for insider trading by a new shareholder. The proceedings also concern private equity giants BC Partners and Silver Lake Partners, a shareholder in New York Knicks.
A federal court action in Oakland, California alleges that David McGlade, chairman and former CEO of Intelsat, sold shares in the satellite operator on November 5, 2019 – just hours after the company’s CEO learned that the Federal Communications Commission (FCC) intends to oppose a deal that would net the company billions.
The lawsuit says McGlade made a deal – along with fellow Intelsat insiders Silver Lake and BC Partners – by selling a 10 million stake for $ 246 million. On November 18, the FCC rejected Intelsat’s offer to sell state-owned radio frequencies that the company was using. for television and radio communications, dispelling hopes of windfall profits of $ 7 billion. By May, the company filed for bankruptcy protection. The stock, which traded at about $ 23 a share ahead of an insider sale, closed Friday at 72 cents a share..
«This is a typical case of insider trading, says the lawsuit filed by the law firm Labaton Sucharow on behalf of Walleye Group, a shareholder of Intelsat. – Intelsat, a satellite operator, has a successful deal with the FCC. Defendant David McGlade, Chairman of the Board of Directors, and Defendant BC Partners and Silver Lake, both sold $ 246 million worth of shares on the same day they learned the FCC would not approve deal».
As The Post first reported in March, Intelsat shareholders have been outraged by the sale of their $ 246 million stake since they first learned that the deal happened on the same day that Intelsat’s chief executive officer Stephen spengler met with FCC senior advisor Nicholas degani, to discuss the problem Intelsat – Unfulfilled Dreams of Profiting from a State Telecommunications Asset.
Shareholders previously believed that only BC Partners and Silver Lake were behind the deals. These claims have led to several class actions filed in the past year. A lawsuit filed Thursday last week that joins previous cases cites an anonymous former Intelsat executive who says Spengler told him the FCC was heading in a direction perpendicular to that suggested by Intelsat. «right after» meetings on November 5th. Executive Director «suggested it was one of the three worst meetings Spengler ever had», the lawsuit says.
Intelsat and a group of satellite operators have offered to help the government repurpose the frequency spectrum they used for the nationwide 5G wireless network by selling it through a private auction. FCC led Ajita paya, seemed to go for a deal until she started getting claims from the senator John F. Kennedy (Louisiana). He advocated a public auction that would enrich the government coffers rather than private owners.
«Spending billions on the radio waves we already have is not a way to spend taxpayer money, Kennedy said publicly at the time. – These foreign satellite companies want all four legs and their muzzle to be in the trough of taxpayers».
Kennedy reportedly told the President of the United States Donald trump about his fears a few days before the meeting on November 5.
«Just hours after this meeting, the defendants began dumping $ 246 million in stocks in an overnight sale, avoiding more than $ 185 million in losses suffered by investors due to the rapid collapse of Intelsat.», – the lawsuit says.
The lawsuit cites emails from Morgan Stanley, which brokered the deal, and an interview with an anonymous former Intelsat executive who says he learned of the November 5 stake sale after noticing high trading volume on the New York Stock Exchange (NYSE). The internal system worked, he later discussed this with the CFO David Tolly, who found out about what was happening only from a staff member.
The former executive recalled that, according to the lawsuit, he felt that the bidding was «outrageous» and «obviously», that insiders were aware of the meeting.
The lawsuit did not specify how many shares McGlade might have sold, and he did not respond to requests for comment. McGlade was responsible for government relations and advised the CEO on business and policy issues, in 2018 he owned 4.5 million shares of Intelsat.
BC Partners did not respond to requests for comment, but previously told The Post that the deals were «based solely on available public information».
Two Intelsat directors from BC Partners – Raymond swieder and Justin bateman – either did not respond to comments or could not be contacted. Sources told The Post that Bateman left BC Partners last month after 20 years with the company..
Silver Lake, which owns 7.5% of Madison Square Garden, declined to comment. The company did not have seats on Intelsat’s board of directors, but it had a contract that gave it special rights to receive information, including materials from board meetings, the lawsuit says..
Silver Lake was also criticized for its timely sale of shares in software provider SolarWinds for $ 158 million six days before it was revealed that the company was undergoing a massive hack, causing its shares to plummet 40%..
«Silver Lake, as in this case, is a large shareholder of SolarWinds, and it again has the right to receive information about the company at the level of the board of directors.», – Intelsat lawsuit says.
SolarWinds said it was unaware of the hack during the company’s sale of its shares Silver Lake. In turn, Silver Lake pointed to a statement from private equity firm Thoma Bravo, which sold SolarWinds shares in the same deal on December 7..
«We were unaware of this potential SolarWinds cyberattack until we entered into a private placement for one institutional investor on Dec 7.», – said Thoma Bravo.
The hedge fund manager, which was a major shareholder in Intelsat in November 2019, told The Post that he was not surprised by the news about SolarWinds and considers it a pattern. He is not involved in a lawsuit against Silver Lake, although he believes the Intelsat trade was highly suspicious..
Silver Lake declined to comment on Intelsat claims.