According to the law firm press release, OSI Systems produces medical monitoring and anesthesia systems; security and inspection systems; and lasers, optics, and optoelectronic components.
The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) the Company manipulated operational test of its Advanced Imaging Technology by selectively picking the best sensors, causing the test not to be representative of the scanners already deployed at airports; (ii) the Company's products raised strong privacy concerns and were subject to disqualification for use in airport security checkpoints; (iii) the Company manufactured its products with parts that directly violated contracts with the TSA, thereby risking cancellation of the contracts; and, (iv) as a result of the above, the Company's financial statements were materially false and misleading at all relevant times.
On November 14, 2012, after the market closed, various news sources reported that a key congressman disclosed the Company may have committed fraud by "knowingly manipulating" the results of an operational test in connection with the Company's Advanced Imaging Technology ("AIT"), otherwise commonly known as body scanners. On this news, OSI Systems shares declined $21.40 per share or 28%, to close at $54.89 per share on November 15, 2012.
On January 22, 2013, the TSA reported that it had ended its contract with the Company, and that OSI Systems would have to bear the costs of removing all Rapiscan full body scanners from airports, because TSA administrators concluded the company could not meet a congressional deadline to produce generic passenger images. On this news, the Company's shares fell $14.03 per share to $57.33, a one day decline of over 19%.
Thereafter, on December 6, 2013, the United States Transportation Security Administration canceled a $60 million contract for the company's carry-on baggage screening equipment, with the possibility of a future ban on contracting with the Department of Homeland Security. The reason for the canceled contract and future ban is that a part in the company's baggage scanning machine was manufactured in China, violating TSA security policies. On this news, the Company's shares fell $21.69 per share to $43.63, a decline of over 33% on December 6, 2013.
On March 17, 2014, the Court issued an Order appointing lead plaintiff and approving lead counsel. Lead Plaintiff filed an amended complaint on May 20.
On August 20, 2015, the parties entered a Stipulation of Settlement. This Settlement was preliminarily approved by the Court on September 2. On December 21, 2015, the Court granted final approval of the Settlement and dismissed this case.