Briefs

Former South Bay Exec. Sentenced to Prison for Insider Trading and Securities Fraud

LOS ANGELES – A former executive at a Hawthorne-based company was sentenced Nov. 29, to 35 months in federal prison for trading in options contracts using inside company information and illegally purchasing shares of a company his employer had targeted for acquisition.

Mark A. Loman, 60, of Hermosa Beach, was sentenced by United States District Judge Dale S. Fischer. Judge Fisher also ordered Loman to pay a $600,000 fine. At the conclusion of a 10-day trial, a jury on Sept. 2 found Loman guilty of four counts of securities fraud and four counts of insider trading.

Loman was a vice president of finance and the corporate controller for OSI Systems Inc., a publicly traded security, health care and electronics manufacturing company, from 2006 until 2018. In these roles, Loman had advance knowledge of OSI’s revenue and earnings and, as corporate controller, was responsible for compiling and internally reporting the company’s confidential financial results.

In December 2015, Loman received confidential information that OSI was financially underperforming and would fall far short of their earnings and revenue forecast for its second quarter of its fiscal year 2016. In December 2015, Loman purchased a series of options contracts with the intent of profiting when OSI’s stock price fell.

On Jan. 27, 2016, OSI announced its disappointing second-quarter earnings, and lowered its sales and earnings guidance for the remainder of its fiscal year. On the day of this announcement, OSI shares plunged approximately 30%  in value from their previous closing day price. As a result, Loman gained about $355,000 in illegal profits from this scheme.

In March 2016, Loman misused nonpublic information by purchasing stock of American Science & Engineering Inc., a manufacturer of security screening equipment that OSI had targeted for acquisition. Once OSI publicly announced in June 2016 its agreement to acquire AS&E, Loman immediately sold his shares in AS&E and made approximately $120,000 in illegal gains. In September 2016, OSI formally acquired AS&E for approximately $270 million.

Loman made a total of approximately $475,000 in illicit gains through this scheme. In July 2019, the Securities and Exchange Commission filed a lawsuit against Loman, charging him with insider trading. Trial is scheduled for that lawsuit in April 2022.

      

 

 

 

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