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.
