(CN) - OSI Systems Inc. faces a federal class action over a contract with the Albanian government that spurred investigations by the Securities Exchange Commission and the U.S. Department of Justice.
Filed in the U.S. District Court for the Central District of California, the complaint follows a related December 2017 class action that accused OSI’s officers of malfeasance concerning multimillion dollar contracts with the Mexican and Albanian governments.
OSI is based in Hawthorne, California, and produces medical monitoring and anesthesia systems, optoelectric devices and security inspection systems. The lawsuit was filed on behalf of investors who purchased OSI stock between Aug. 21, 2013 and Feb. 1, 2018.
As detailed in the 2017 class action, the public’s first insight into trouble at OSI stems from a report published by Muddy Waters Research that claimed the Albanian contract for turnkey screening services had a value of $150 to $250 million, but that OSI “likely bribed somebody by giving half of it away” since 49 percent of OSI’s project company, S2 Albania SHPK, was transferred to an Albania doctor for less than $5.
OSI stock took a dive of $24.55 per share to close at $59.52 per share on Dec. 6, 2017, following the report which OSI strongly denied at the time. Through press releases the company insisted that its programs in Mexico and Albania were not the product of unlawful conduct but were “the result of public tenders” that had “resulted in enhanced security, increased seizures of contraband, and improved transparency in customs declarations, significantly benefitting both countries.” OSI’s stock bounced back to $64.13 on Dec. 7.
According to the new lawsuit, OSI stunned investors two months later when it admitted that wrongdoing had occurred and revealed investigations into the company’s compliance with the Foreign Corrupt Practices Act by the SEC and the DOJ were underway. OSI is also being investigated for insider trading.
The class is represented by Lionel Z. Glancy and Robert V. Prongay of Glancy Prongay & Murray LLP in Los Angeles; Maya Saxena, Joseph E. White III and Lester R. Hooker of Saxena White PA in Boca Raton, Fla., and Steven B. Singer in White Plains, N.Y.
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