Misonix Inc., a Farmingdale maker of ultrasonic medical devices, has agreed to reform its internal controls and pay $500,000 in attorneys' fees as part of the preliminary settlement of a shareholder lawsuit stemming from possible violations in China of the Foreign Corrupt Practices Act.
The settlement is scheduled for a final court review on July 26 in U.S. District Court in Central Islip.
Misonix shares fell 0.6 percent to $21.05 at Wednesday's market close. Twelve months ago the stock was trading at $12.60.
In September 2016 Misonix informed the Securities and Exchange Commission and the Department of Justice about possible FCPA violations involving its independent distributor in China, and in 2017 Misonix disclosed in a government filing that some company officials had been involved in possible violations of that law.
In addition to Misonix, the lawsuit names Michael McManus Jr., who stepped down as director, president and chief executive of the company in August 2016, current president and CEO Stavros G. Vizirgianakis, former vice president and treasurer Richard Zaremba and other company employees.
The Foreign Corrupt Practices Act bars Americans from bribing foreign government officials directly or indirectly to further their business.
The settlement requires Misonix to post its FCPA policies for employees, to ensure that newly acquired businesses put anti-corruption policies into place, and to review compliance with that law as an element in determining compensation.
"Remedial measures" already implemented or underway by Misonix include the termination of its agreement with its distributor in China, Cicel Science & Technology Co. Ltd., and the September 2017 agreement by Zaremba to resign, according to the settlement.
The settlement notice said the shareholder plaintiffs decided to settle the case after considering the "risk, expense and length" of legal proceedings to bring it to a conclusion.
The defendants denied "all of the claims" but said they decided to settle given that the legal case "would be protracted, expensive and distracting," according to the notice of proposed settlement for shareholders.
Misonix was Long Island's 38th largest publicly traded company based on 2017 revenue of $31 million.
In April 2018 Cicel filed a lawsuit against Misonix in U.S. District Court alleging breach of contract. That case was continuing as of mid-May.
Manhattan attorney Arthur H. Aufses III, who represents McManus, and Washington attorney John S. Williams, who represents Misonix, Vizirgianakis, Zaremba and other employees, declined to comment beyond what was contained in the settlement documents.