Thursday, October 29, 2020

Security-Device Maker OSI Says U.S. Ends Bribery Probes

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U.S. authorities have closed foreign-bribery probes into OSI Systems Inc. following the dismissal last month of a shareholder lawsuit against the maker of airport security systems, the company said Wednesday.

The Hawthorne, California-based company last year disclosed the Foreign Corrupt Practices Act investigations, which were being conducted by the Securities and Exchange Commission and Justice Department.

An OSI Systems representative didn’t immediately respond to a request for comment. The SEC and Justice Department declined to comment.

The probes followed a 2017 report by short seller Muddy Waters LLC, which alleged that OSI Systems had won a cargo-scanning contract in Albania by paying bribes. OSI Systems denied the allegations at the time.

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The report prompted shareholder lawsuits, citing Muddy Waters’s research and accusing OSI Systems of misleading investors about the Albania contract, according to complaints filed in federal court in California.

A federal judge in California dismissed those claims in May, saying OSI’s securities filings didn’t qualify as misstatements under U.S. securities law or contain illegal omissions. The share price of OSI Systems rose 4.4% Wednesday.

This isn’t the first time that Muddy Waters has highlighted potential FCPA violations to bet that the price of a company’s stock will fall.

In 2015, the firm said it expected a drop in stock prices of TeliaSonera, now called Telia Co., alleging that the Swedish telecommunications company may have paid billions of dollars in bribes in Eurasia and Nepal. Telia at the time was under investigation for FCPA violations in Uzbekistan. In 2017, the company agreed to pay $965 million in settlements with the SEC and prosecutors in the U.S. and Netherlands to resolve the Uzbekistan probes.

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