In re Silver Lake Group, L.L.C. Securities Litigation

Background

This securities class action was brought by Lead Plaintiff Walleye Opportunities Master Fund Ltd. and Walleye Manager Opportunities LLC. The Lead Plaintiff alleged that defendants violated Section 10(b) of the Securities Exchange Act, Rule 10b-5, and Section 20A by trading Intelsat S.A. stock while possessing material, nonpublic information.

The alleged trades occurred in a $246 million private block sale involving David McGlade, BC Partners, and Silver Lake. The allegations concerned information about negotiations over the auction of C-Band licenses. On November 18, 2019, the Federal Communications Commission announced that it would hold a public rather than private auction, and Intelsat’s stock price fell by about 40 percent. Intelsat later filed for bankruptcy.

The second amended complaint added allegations from a third confidential witness, information from Intelsat’s bankruptcy proceedings about a November 5, 2019 meeting with the Federal Communications Commission, and information about an Intelsat board meeting on November 14, 2019.

Analysis

The court stated that the allegations against the Silver Lake defendants were unchanged and that the Lead Plaintiff did not address their arguments. Relying on its earlier ruling, the court granted the Silver Lake defendants’ motion to dismiss.

As to the BC Partners defendants, the court found that the new allegations did not show that defendants Raymond Svider or Justin Bateman received the relevant information before the block trade. The confidential witness described their involvement with Intelsat and the way information was communicated but did not say they were present at the relevant time or received the pertinent communications. The court therefore found the allegations insufficient and granted the BC Partners defendants’ motion.

As to McGlade, the court found that the confidential witness did not identify specific communications showing that McGlade received the information from the November 5 meeting before the sale. The court concluded that the amended allegations remained insufficient to state a claim against him.

Ruling

Judge Jeffrey White granted defendants’ motions to dismiss the second amended class action complaint. The court ordered that a separate judgment be entered and directed the Clerk to close the file. The provided opinion text is unclear at the end of the conclusion because part of the language concerning further amendment and prejudice is missing or corrupted; this summary therefore does not characterize the dismissal as with or without prejudice.