In Los Angeles, a federal jury has found the former CEO and chairman of Ontrak guilty of an insider trading scheme. Terren Scott Peizer was convicted on one count of securities fraud and two counts of insider trading, making this the first prosecution by the Justice Department solely based on Rule 10b5-1. Peizer had set up plans to sell shares in 2021 after learning that Ontrak’s largest customer was terminating its contract with the company. When this news became public, Ontrak’s stock price dropped by more than 44%.
Deputy Assistant Attorney General Nicole M. Argentieri emphasized that the Justice Department will continue to pursue cases against corporate executives who abuse insider trading rules. Despite the conviction, Peizer’s attorney stated that they plan to appeal the decision. The defense argued that Peizer acted in good faith based on advice from his management team when setting up the trading plans. Peizer, who is 64 years old, is set to be sentenced in October and could face up to 25 years in prison for securities fraud and up to 20 years for each count of insider trading. He resigned as CEO of Ontrak last March after being indicted.