Virgin Mobile USA began as a 50:50 joint venture between Sprint Nextel and Sir Richard Branson's Virgin Group, which floated the company last month.

The shareholders suing the business invested in Virgin Mobile USA's initial public offering, or later bought its stock in the open market.

Last month, the pay-as-you-go service provider sold 27.5m shares for $15 each, at the low end of expectations. The shares rose as high as $16.63 a share on the first day on the open market, but have since steadily declined, amid a broader market sell-off.

advertisementThey were trading down 27c at just $7.25 yesterday afternoon, having fallen around 55pc from their peak.

The offering raised $413m. The company had said it would use the proceeds from the stock sale to repay debt and to buy out 16.7pc of Sprint Nextel's interest.

A spokesman for the company said: ''The lawsuit is completely without merit and we will defend it vigorously."

The company is a separate entity from Virgin Mobile in the UK, which was sold to cable giant NTL to form Virgin Media, in which Sir Richard is the largest shareholder - as he is is Virgin Mobile USA.