Los Angeles, California - A former executive at a Hawthorne-based company was found guilty by a federal jury Thursday of criminal charges that he traded in options contracts using inside information and illegally purchased shares of a company his employer had targeted for acquisition.
Mark A. Loman, 60, of Hermosa Beach, was found guilty of four counts of securities fraud and four counts of insider trading.
According to the evidence presented at his 10-day trial, 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. Acting on this information in December 2015, Loman purchased a series of options contracts with the intent of profiting when OSI’s stock price fell.
On January 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 percent in value from their previous closing day price. As a result, Loman gained approximately $355,000 in illegal profits from this scheme.
In March 2016, Loman misused nonpublic information by purchasing stock of American Science & Engineering Inc., a Billerica, Massachusetts-based 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.
United States District Judge Dale S. Fischer has scheduled a January 10, 2022 sentencing hearing. Each charge of securities fraud carries a statutory maximum sentence of 25 years in federal prison. The statutory maximum sentence for each count of insider trading is 20 years in federal prison.
The FBI investigated this matter.
Assistant United States Attorneys Scott Paetty and Karen E. Escalante of the Major Frauds Section are prosecuting this case.