SAN FRANCISCO -- Shareholder activism has merged with America's Most Wanted-style drama in the latest twist to the strange saga of Vitesse Semiconductor ( VTSS).

On Tuesday, one of the chipmaker's largest institutional shareholders went gumshoe, initiating a "formal investigation" and launching a telephone hotline designed to collect tips discrediting two newly appointed board members.

"Chapman Capital encourages any party who has endured professional interaction with or exposure to either Ms. Willow Shire or Mr. Steve Hanson to contact Chapman Capital, anonymously or for attribution at the caller's full discretion," read the notice, which provided both a telephone number and email address.

The activist hedge fund claims to have already dug up "disconcerting" information about the two directors' backgrounds and affiliations in its own preliminary due diligence, which it said it would make available to certain Vitesse shareholders upon request.

Chapman Capital, a Los Angeles-based parent of two hedge funds which together own 8.3% of Vitesse common stock, has been a thorn in Vitesse management's side for some time, agitating to sack a previous Vitesse board member earlier this year .

Although Chapman Capital got its wish on that score, it now claims that two new directors are merely "re-treaded substitutes who have been admitted to Vitesse's boardroom without the legitimacy of being vetted, much less elected."

The cause of the legitimacy dispute stems from the fact that Vitesse has not had a shareholder meeting, the usual venue for electing board members. Vitesse says Securities and Exchange Commission regulations preclude it from holding the meeting because of its failure to file audited quarterly earnings reports for the past two years (a lapse related to Vitesse's investigation into past stock-option backdating).

In July, Vitesse said it was soliciting shareholder "recommendations" for new director candidates to be approved by the board, given its inability to elect directors the old-fashioned way.

But Chapman Capital is demanding a real shareholder meeting, which it hopes to obtain by filing a complaint in Delaware court.

Chapman Capital claims that Hanson, a former CEO of ON Semiconductor ( ONNN) who was named a Vitesse board member on Monday, is neither a legitimate or wise choice. According to Chapman, ON Semi's share price declined 90% during Hanson's tenure.

And the hedge fund cites a 1998 news article about Shire, who was appointed to the Vitesse board in June, as evidence that her work experience makes her unqualified for the board.

A representative from Vitesse did not return calls for comment.

Robert Chapman, managing member of Chapman Capital, said he could not comment beyond what was in the release and declined to elaborate on what kind of investigative resources the company has retained to pursue its detective work.

According to its announcement, Chapman plans to investigate the remaining four members of Vitesse's board as well.

Patrick McGurn, executive vice president of Institutional Shareholder Services, says investigative services have been used in proxy battles by parties on both sides of the aisle for a few years. Usually, though, McGurn says, the detective work is done quietly and behind the scenes, rather than in the public square.

"I think it's a sign of how high the stakes are in these fights," says McGurn. "The tactics are becoming much more aggressive than they were a couple of years ago."

Shares of Vitesse were unchanged at $1.01 in recent trading Monday.

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