Terren Scott Peizer, former CEO of Ontrak, was sentenced to 42 months in prison for insider trading related to Rule 10b5-1 trading plans. This case marks the first of its kind. Peizer reportedly sold Ontrak stock to avoid substantial losses as news of a major client loss approached, despite claiming no wrongdoing. The case highlights a new precedent in enforcement of trading plans, as Peizer was ordered to pay $17.9 million in fines and restitution after the authorities proved he had illicitly profited by selling shares before the stock value dropped.
Peizer was sending increasingly frantic text messages to a confidante and Ontrak executives about the potential loss of a major client in the months before he set up a trading plan to sell Ontrak stock.
Peizer avoided $12.5 million in stock losses by selling his shares before certain information was made public and the stock price dropped more than 40%, authorities said.
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