OSI Systems Inc.
OSI Systems Accused of Obtaining Major Contract Through Corruption
Purchasers of OSI filed a securities class action complaint against the company’s officers and directors for alleged violations of the Securities Exchange Act of 1934 between August 21, 2013 and December 6, 2017. According to the complaint, on August 21, 2013, OSI announced that it had entered into a 15-year agreement – valued between $150 and $250 million – to provide turnkey cargo and vehicle security screening services in Albania. OSI officials failed to disclose that OSI transferred 49% of its project company associated with the Albania contract—the entity to which all rights and obligations under the contract belong and therefore worth millions—to a holding company owned by an Albanian doctor for consideration of less than $5.00. On December 6, 2017, Muddy Waters Research reported that OSI obtained the contract through corruption, and accused OSI of engaging in improper sales and cash payments to government officials, making the company vulnerable to potential civil and criminal liability. On this news, OSI’s stock fell $24.55 per share, or over 29%, to close at $59.52 per share on December 6, 2017, and has yet to recover from its loss in value.