OSI Systems, Inc. (OSIS) Systems Accused of Obtaining Major Contract Through Bribery
On December 6, 2017, Muddy Waters Research published a report on OSI entitled “OSIS: Rotten to the Core.” The report claimed that while a 2013 Albanian contract had an estimated top line lifetime value of $150 million to $250 million, OSI had likely bribed people by giving half of it away. Interviews with former employees yielded anecdotes of improper sales, bribes, and fraud. OSI initially denied the report, but a mere two months later, it disclosed that the U.S. Securities and Exchange Commission and the U.S. Department of Justice were looking into OSI’s compliance with FCPA, as well as possible insider trading. In the wake of these alarming revelations, OSI shares plummeted wiping out $560.5 million in shareholder equity.
While OSI and shareholders have been severely damaged by this misconduct, the executives and directors have only benefited since 2013. They have pocketed over $75 million in compensation and reaped over $45 million in unlawful insider sales. Moreover, under their stewardship, OSI wastefully spent over $8 million to repurchase artificially inflated shares.
OSI Systems is currently the subject of multiple lawsuits, including a securities fraud class action alleging that the company violated the Securities Exchange Act of 1934. The lawsuits could result in substantial damages to OSI Systems, causing depletion of its financial resources and further harm to shareholders.
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