Vitesse Semiconductor (OTC:VTSS) directors may face some opposition in coming months as Chapman Capital prepares to do battle. The activist hedge fund announced its intentions today to investigate management's backgrounds, affiliations and board qualifications. Shareholders are hoping that this move could forces changes at a company that hasn't held a board meeting in over two years.

Chapman Capital's recent Schedule 13D/A filing is the latest in a long line of letter criticizing the company for unethical - and allegedly illegal - actions on behalf of management and the board. The largest problem is the fact that the company hasn't had a reasonable annual meeting in more than two years. The company applied to the SEC for relief but was turned away, which prompted Chapman to launch a campaign to find evidence of misconduct.

Robert L. Chapman, Jr., Managing Member of Chapman Capital, commented, "Nearly two years has passed since Vitesse's owners have been allowed to attend a shareholders meeting to elect directors. Instead, foisted upon Vitesse's owners are these 're-treaded' substitutes who have been admitted to Vitesse's boardroom without the legitimacy of being vetted, much less elected, by the owners to whom they purport to report. To Chapman Capital, Vitesse's Board and senior management seem quite anxious to perpetuate the absolute veto power that has allowed them to discriminate against director candidates who may 'disrupt' their stock option and cash compensation enriching party, while holding them accountable and potentially opening 'back-dated option closets' concealing a skeleton or two."

An additional very detailed letter outlined the evidence obtained thus far while the hedge fund also provided a hotline through which others in the industry could call in reports. If change is effected, it could mean hefty profits for shareholders benefiting from a turnaround. This makes VTSS a stock worth watching!

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