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Harry Cassin
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Andy Spalding
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Jessica Tillipman
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Richard L. Cassin
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Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
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Julie DiMauro
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Thomas Fox
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Marc Alain Bohn
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Bill Waite
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Shruti J. Shah
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Russell A. Stamets
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Richard Bistrong
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Eric Carlson
Contributing Editor

Short seller allegations trigger FCPA probe of OSI Systems

OSI Systems, Inc. said in a securities filing Thursday that the DOJ and SEC are investigating the company’s compliance with the Foreign Corrupt Practices Act.

California-based OSI Systems said the investigations followed a report by a short seller.

Short seller Muddy Waters alleged in December that the company relied on bribes to win a major contract in Albania. According to Muddy Waters, OSI used a joint venture with an Albanian construction company to pay the bribes.

OSI denied the bribery allegations.

Muddy Waters then said OSI’s response “in no way changes our opinion that [the company] is rotten to the core.”

OSI Systems makes screening and inspection equipment for airport and border security, and for medical applications. The company has about 3,900 employees. Revenues last year were $830 million.

OSI said in Thursday’s filing that the SEC and DOJ are also investigation trading in the company’s securities. The agencies have subpoenaed information regarding “trading by executives, directors and employees,” the filing said.

OSI said it has “taken action with respect to a senior-level employee” in connection with the trading allegations.

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Here’s the full FCPA disclosure from OSI Systems, Inc.’s February 1, 2018 Form 8-K:

Following a report by a short seller, the Securities and Exchange Commission (SEC) commenced an investigation into the Company’s compliance with the Foreign Corrupt Practices Act (FCPA).  The U.S. Attorney’s Office for the Central District of California (DOJ) has also said it intends to request information regarding FCPA compliance matters.  The SEC and DOJ are also conducting an investigation of trading in the Company’s securities, and have subpoenaed information regarding trading by executives, directors and employees, as well as Company operations and disclosures in and around the time of certain trades.  In relation to the matters that are the subject of the trading-related investigation, the Company has taken action with respect to a senior-level employee.  At this time, the Company is unable to predict what, if any, action may be taken by the DOJ or SEC as a result of these investigations, or any penalties or remedial measures these agencies may seek. The Company places a high priority on compliance with its anti-corruption and securities trading policies, and is cooperating with each of the government investigations.


Richard L. Cassin is the publisher and editor of the FCPA Blog.

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