By City News Service
LOS ANGELES (CNS) – A former executive at a Hawthorne-based company was sentenced to nearly three years in federal prison today for insider trading, with prosecutors saying he misused confidential company information and illegally purchased shares of a firm his employer planned to acquire.
U.S. District Judge Dale S. Fischer said Mark A. Loman, 60, of Hermosa Beach, was motivated by greed when he “betrayed his employer and the market.” Along with the 35-month prison sentence, the judge ordered Loman to pay a $600,000 fine.
Loman was convicted in September of four federal counts each of securities fraud and insider trading, according to the U.S. Attorney’s Office.
Prosectuors said Loman was the controller and vice president of finance for OSI Systems Inc., a publicly traded security, health care and electronics manufacturing company, from 2006 to 2018, giving him access to the company’s revenue, earnings and confidential finance reports.
After receiving information in late 2015 that OSI was struggling financially and would fall short of its quarterly revenue estimates, Loman purchased “options contracts” that would allow him to profit when OSI’s stock price fell, according to the U.S. Attorney’s Office.
When the company announced its second-quarter earnings in January 2016, OSI’s stock plunged by 30%, and Loman earned about $355,000 in illegal profits, prosecutors said.
Prosecutors also said that in March 2016, Loman bought stock in American Science & Engineering Inc., a Massachusetts-based manufacturer of security screening equipment that OSI had targeted for acquisition. When OSI publicly announced in June 2016 its plans to acquire AS&E, Loman sold his shares in the company and made about $120,000 in illegal profits, authorities said. In September 2016, OSI formally acquired AS&E for $270 million.
Loman collected about $475,000 in illicit gains through the scheme, according to federal prosecutors.
The Securities and Exchange Commission sued Loman in July 2019, accusing him of insider trading. An April 2022 trial date is set.