Former corporate controller and vice president of finance sentenced to 35 months in prison for insider trading

Mark Loman, the former corporate controller and vice president of finance for OSI Systems, Inc. was recently sentenced in the US District Court for the Central District of California to 35 months in federal prison for trading in options contracts and purchasing shares of a company that OSI planned to acquire, based on material nonpublic information obtained during the course of his employment.  On November 29, 2021, a federal jury found Loman guilty of four counts of securities fraud and four counts of insider trading.  In addition to the time in prison, Loman was also ordered to pay a special assessment of $800 and a $600,000 fine as part of his sentence.  Loman plans to challenge the judgment and filed a Notice to Appeal on December 10, 2021.

In November 2019, Loman was indicted by a federal jury for his participation in an insider trading scheme.  According to the indictment, as a vice president and corporate controller, Loman had advance knowledge of OSI’s quarterly revenue and earnings and, in December 2015, learned that OSI was financially underperforming in the second quarter of its fiscal year 2016.  Based on this information, Loman purchased a series of options contracts in order to profit in anticipation of OSI’s stock price falling when the negative earnings report was released.  In January 2016 when the second-quarter earnings report was announced, OSI shares fell by approximately 30 percent, and Loman made approximately $355,000 in illegal profits from these trades.  Shortly thereafter in March 2016, Loman misused material nonpublic information related to OSI’s intended purchase of American Science & Engineering Inc. (AS&E), a security screen equipment company, when he purchased AS&E stock before acquisition plans were announced. When the acquisition was announced by OSI in June 2016, Loman immediately sold his AS&E shares and realized $120,000 in illegal gains.

In July 2019, the Securities and Exchange Commission filed a complaint against Loman for civil charges related to Loman’s improper trades.  The Justice Department reports that trial for the SEC lawsuit is scheduled to begin in April 2022.

Department of Justice Press Release | Judgment | Appeal Notification | Indictment | SEC Complaint

 
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