The train wreck that is Vitesse Semiconductor ( VTSS) continues to make for a blazing spectacle.

In the latest flare-up, one of the chipmaker's largest institutional shareholders is demanding that the company hold a shareholder meeting in order to oust at least one member of its board.

In a letter sent to Vitesse's board Friday, Chapman Capital accuses the current board and senior management team of negligence and potential complicity in the company's stock option backdating, and of failure to honor its fiduciary duties to shareholders.

In addition to scheduling a stockholder meeting, Chapman Capital's letter says that venture capitalist and Vitesse director Jim Cole, who Chapman claims has been held responsible for the company's "deep-seated problems," must resign immediately.

Cole was not immediately available for comment.

Chapman says it will file suit in Delaware court to force Vitesse to hold a shareholder meeting if the company doesn't immediately schedule one on its own.

Chapman Capital, the Los Angeles-based parent of two hedge funds, owns 11.8 million Vitesse common shares, or 5.3% of the company, making it the company's third-largest shareholder, according to Lionshares.

"Despite Chapman Capital's sizable ownership in the company, you would be well advised not to mistake it for a vote of confidence whatsoever in Vitesse's board that reports and is held accountable to the entire ownership base," the letter reads.

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