Ontrak Inc.’s founder rushed to dump over $20 million of the healthcare company’s stock using insider information about a souring relationship with its biggest client, Cigna, helping him avoid $12 million in losses, prosecutors told California federal jurors Tuesday in a first-of-its-kind securities fraud trial.
Opening statements kicked off in the case of Terren Peizer, the founder, chair and former CEO of Ontrak Inc. Peizer is facing three counts of securities fraud related to his using two Rule 10b5-1 plans between May and August 2021 to trade using material nonpublic information: that his company was about to lose its then-leading customer, Cigna, which makes up a large portion of its revenue.
Ontrak provided behavioral health services to members of large health insurance plans which aimed to cut down on insurers’ costs. Cigna was one of Ontrak’s biggest customers, and the two entered into a $90 million contract in 2020, which was to last three years, though Cigna could terminate it upon 30 days’ notice.
