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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.

The U.S. Department of Justice levied securities fraud charges against Peizer in March 2023, and later filed a superseding indictment in January against him for insider trading, in what's known as the first-ever criminal case based solely on an executive's use of so-called Rule 10b5-1 trading plans.

Under Rule 10b5-1 of the Exchange Act, a corporate insider can establish a trading plan for selling their own stocks but must do so without possessing material, nonpublic information about the company at the time they enter into the plan.

DOJ trial attorney Della Sentilles told jurors Tuesday that "the writing was on the wall" for Peizer, after discovering in spring 2021 that his company was in danger of losing Cigna. Ontrak had already lost another client, Aetna, earlier that year, which caused stock prices to plummet over 40%, resulting in millions of dollars in losses, jurors heard.

However, Peizer wasn't going to simply sit back, "let history repeat itself" and lose millions of dollars again, and decided to sell Ontrak stock using that insider information in May 2021, she said.

Eventually, history did repeat itself, as Cigna announced its intent to terminate its contract in August 2021, leading stock prices to again plunge more than 40%, Sentilles said. Armed with material, nonpublic information, Peizer essentially established his Rule 10b5-1 trading plans in August and May 2021, and quickly shed over 600,000 shares worth over $20 million, avoiding losses of approximately $12 million, jurors heard.