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Security biz's ex-veep of finance accused of masterminding $400,000 insider-trading caper
Exec lined up sales of shares based on internal know-how, claims watchdog
The former finance VP of OSI Systems – a maker of airport luggage scanners and similar security-screening tech – has been charged with making big bucks from insider trades on his own company's plunging stock.
America's financial watchdog the SEC on Thursday filed a complaint (PDF) in the central district of California district court against Mark Loman, former controller and vice president of finance, alleging violation of the Securities Exchange Act of 1934. The complaint was filed in the Los Angeles federal court.
Specifically, the SEC alleges that from late 2015 to early 2016 Loman used inside info from the California company to pull off a pair of stock option trades that netted him more than $400,000 in ill-gotten gains. Loman would leave OSI in 2017.
At the time, OSI was about to announce that it would be missing its 2015 Q4 financial expectations. Knowing the news would lead to a drop in OSI stock price, the SEC says Loman set up stock option trades that bet on a price drop. When the news hit and OSI share prices plummeted by 35 per cent, Loman alleged turned a tidy $300,000 profit for himself.
Just months later, in February of 2016, Loman pulled off another insider-trading deal when he learned of an impending deal for OSI to American Science and Engineering (AESI). Knowing OSI was going to pay more than the current value of AESI stock in the deal, he bought stock which was then sold for a $100,000 profit after the news became public.
"As a senior employee of OSIS with access to confidential financial information, Loman was subject to several restrictions designed to limit his ability to trade OSIS shares in certain situations, or to trade any securities on the basis of confidential information he obtained through his employment at OSIS," the SEC said in its complaint.
"In particular, Loman received OSIS’s insider trading policy many times over the course of his employment, including in the fall of 2015. He also signed a certificate acknowledging that he had read and would comply with OSIS’s insider trading policy."
In addition to taking back his trading profits, the SEC is asking the court to issue an order prohibiting him from serving as an officer or director for any publicly-traded company and to impose further penalties should he again run afoul of insider trading laws.
OSI did not respond to a request for comment on the case. ®
Biting the hand that feeds IT
