LOS ANGELES — A stock analyst testified before a California federal jury on Thursday, revealing that he noticed Ontrak Inc. founder Terren Peizer selling company shares just weeks before Cigna announced the termination of its $90 million contract with Ontrak.
The trial against Peizer, who faces three counts of securities fraud, began on Tuesday. Prosecutors allege that Peizer used two Rule 10b5-1 plans to sell shares between May and August 2021 while in possession of nonpublic information about the impending loss of Ontrak’s leading customer, Cigna. This move, they claim, helped him avoid $12 million in losses.
Rule 10b5-1 plans allow corporate insiders to pre-schedule trades provided they certify they are unaware of any material, nonpublic information at the time.
Ontrak, a provider of behavioral health services, heavily relied on its $90 million contract with Cigna, which it signed in 2020. During the trial, defense attorneys argued that Peizer sold the shares to avoid losing stock warrants set to expire later in the year, not because of insider knowledge about Cigna.
