SEC Charges Former Company Controller with Insider Trading
Litigation Release No. 24540 / July 18, 2019
Securities and Exchange Commission v. Mark Loman, No. 2:19-CV-06187 (C.D.C.A. filed July 18, 2019)
The Securities and Exchange Commission today filed insider trading charges against the former controller of OSI Systems, Inc., a California-based security, electronics, and healthcare manufacturing company, who secretly used confidential information he obtained in his position to unlawfully trade securities. The alleged illegal trades generated profits of more than $400,000.
The SEC's complaint, filed in federal court in Los Angeles, California, alleges that Mark Loman, the former Controller and Vice President of Finance of OSI, knew that the company was going to fall far short of its revenue and earnings expectations in the last quarter of 2015. Just days before the end of the quarter, Loman made options trades betting that OSI's stock would go down in price. When OSI publicly announced its disappointing quarterly financial results, its stock dropped approximately 35%, netting Loman more than $300,000 on the options trades. As alleged, Loman further profited from the misuse of nonpublic information by purchasing stock in a target company after he learned that OSI was in negotiations to acquire the target at a premium over its market price. When OSI's intended acquisition was announced publicly, Loman immediately sold his shares, netting more than $100,000.
The complaint charges Loman with violating the antifraud provisions of Section 10(b) of the Securities and Exchange Act of 1934 and Rule 10b-5 thereunder and seeks disgorgement of ill-gotten gains plus prejudgment interest, penalties, injunctive relief, and a prohibition from acting as an officer or director of an SEC-reporting company.
The SEC's investigation was conducted by Ruth Hawley and supervised by Jeremy Pendrey and Erin Schneider of the San Francisco Regional Office. The litigation will be led by Sheila O'Callaghan, also of the San Francisco Regional Office, and Ms. Hawley. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.