The US Securities and Exchange Commission recently announced that a final judgment was entered against Mark Loman, the former Controller and Vice President of Finance of OSI Systems, Inc. (OSIS), a California-based security, electronics and healthcare manufacturing company, to resolve insider trading charges related to unlawful securities trades made in 2015 and 2016. As part of the judgment, which was issued in the District Court for the Central District of California on April 11, 2022, Loman agreed to pay the SEC $482,050 to settle the charges.
According to the SEC’s complaint, as the Controller and Vice President of Finance of OSIS, Loman learned in advance that the company’s final quarter of 2015 would fall short of its revenue and earnings expectations. Based on this material non-public information (MNPI) and only three days before the end of the quarter, Loman allegedly purchased “put options” that allowed him to profit from a drop in OSIS’s stock price. After the company publicly announced the disappointing quarterly financial results in early 2016, the stock price dropped approximately 35 percent allowing Loman to realize more than $300,000 on his options trades. A few months later, Loman netted an additional $100,000 for allegedly misusing MNPI once again, this time to purchase shares in American Science and Engineering, Inc. (ASEI) in advance of OSIS’s public announcement in June 2016 that it would acquire ASEI.
In 2019, the SEC charged Loman with violating Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder. In order to settle these charges, Loman recently consented to the entry of a final judgment and, in addition to the payment of the $482,050 civil penalty, was permanently enjoined from committing further violations of the Exchange Act and permanently barred from serving as an offer or director of a public company.
The SEC also reports that Loman has been barred from appearing or practicing as an accountant before the SEC as part of an agreement to settle an administrative proceeding pursuant to Rule 102 (e) of the SEC’s Rules of Practice.
In November 2019, a parallel criminal action was filed by the US Attorney for the Central District of California resulting in Loman’s indictment for the unlawful trades, and, in late 2021, a federal jury found him guilty of four counts of securities fraud and four counts of insider trading. Following the verdict, Loman was sentenced to 35 months in prison and ordered to pay a $600,000 fine.