Hawthorne-based OSI Systems Inc. saw its shares tumble more than 22 percent to $54.60 on Friday, Feb 2 after the company disclosed in its second-quarter and fiscal-year 2018 earnings report that the Securities and Exchange Commission had launched an investigation into the company’s compliance with the Foreign Corrupt Practices Act. 

The U.S. Attorney’s Office for the Central District of California also told OSI that it intends to request information regarding the FCPA compliance issue, the company said.

Shares recovered slightly despite the larger market tumult last week, nearing $58 early on, for a market capitalization of nearly $1.1 billion.

The investigation stemmed from a December report by San Francisco-based short seller Muddy Waters, which alleged that OSI used bribes to win contracts in Albania, and that it had questionable contract practices in Mexico.

Shorting is a way for traders to turn a profit when a stock’s price declines.

OSI, which designs and manufactures electronic systems and components for the homeland security, medical, defense and aerospace industries, declined to comment at the time of Waters’ report other than to characterize in a press release a short seller’s comments as “misleading allegations.”

OSI did not return calls for comment on the SEC investigation.

Carson Block, founder and chief investment officer at Muddy Waters, told the Business Journal that the SEC’s investigation emphasized his stance “that the company was rotten to the core.”

Block cited former OSI employees as sources for his claims on the Albanian and Mexican contract bribes when he shorted OSI in December.

OSI also said in the earnings report that the SEC and Department of Justice are conducting an insider trading investigation.

“In relation to the matters that are the subject of the trading-related investigation, we have taken action with respect to a senior-level employee,” OSI wrote.

OSI reported a net loss of $47 million ($2.47 per share) for the December quarter compared to net income of $4.8 million (25 cents a share) for the same, year-ago period. Quarterly revenue was up 14 percent to $277.5 million.

The company was founded in 1987 and has 2,400 employees.

Alta Sea Names New CEO

Tim McOsker is the new chief executive of Alta Sea, a nonprofit marine research and innovation center at the Port of Los Angeles.

McOsker replaced the organization’s first chief executive, Leonard Aube, who passed away in April 2015. Aube was also the former executive director of the Annenberg Foundation.

McOsker is an attorney at Century City-based Glaser Weil Fink Howard Avchen & Shapiro. He previously served as chief deputy under former Los Angles City Attorney James Hahn. McOsker served as chief of staff at City Hall after Hahn became mayor in 2001.

McOsker will continue to serve clients as a partner at the law firm while overseeing Alta Sea. He said his experience as an attorney encompasses land use, environmental issues, permitting, municipal law and contracts for a variety of public and private clients.

“Alta Sea has achieved so much in the past few years,” McOsker said. “Now we need to build the organizational infrastructure and be more efficient and sustainable to reach our goals,” he said.

Alta Sea, a public-private partnership, formed in 2013 and sits on a 35-acre parcel owned by the port.

The organization formed after the L.A City Council in 2013 voted to approve a 50-year lease to transform a 100-year-old pier – City Dock No. 1 – into a marine research and innovation center.

McOsker said that Jenny Krusoe, Alta Sea’s executive director, asked him for help negotiating the lease negotiation with the port. Now, Krusoe will report to McOsker.

McOsker said his duties include raising $11-plus million in grants and contributions, creating a strategy to generate more tenant revenue and finalizing a partnership with the Southern California Marine Institute, a research consortium of 23 universities and aquariums.

TV for Manufacturers

Discovery Channel TV show “How it’s Made” is looking to feature manufacturers in California.

A press release sent by Torrance-based California Manufacturing Technology Consultants says the show will be filming in the state from Feb. 20 to March 9. Show producers are looking for manufacturers of all types to appear on the show.

Contact the show’s research director, Robert Morselli, at [email protected] for more information.

Staff Reporter Shwanika Narayan can be reached at [email protected] or (323) 556-8351.