First insider trading prosecution based exclusively on the use of a trading plan
Former Ontrak CEO Terren Scott Peizer convicted of insider trading using Rule 10b5-1 for the first time
Peizer entered into two trading plans while possessing material non-public information about a significant risk to Ontrak's largest customer
In a significant case of insider trading, the former CEO and chairman of Ontrak, a publicly traded health care company based in Nevada, has been found guilty by a federal jury in Los Angeles. Terren Scott Peizer was convicted on one count of securities fraud and two counts of insider trading. This is the first case that the Justice Department has prosecuted exclusively based on Rule 10b5-1, which allows company insiders to create a predetermined plan to sell shares while also setting limits on certain trading practices. Peizer avoided over $12.5 million in losses by entering into two Rule 10b5-1 trading plans while possessing material non-public information about a significant risk to Ontrak's largest customer. The Justice Department described this as the first insider trading prosecution based exclusively on the use of a trading plan, and emphasized that they will not let corporate executives who trade on inside information hide behind trading plans they established in bad faith. Peizer faces up to 25 years in prison for securities fraud, and up to 20 years for each count of insider trading.
Former CEO, executive chairman, and chairman of the board of Ontrak Inc., Terren Peizer, was convicted for engaging in an insider trading scheme using Rule 10b5-1 trading plans.
Peizer avoided over $12.5 million in losses by entering into two Rule 10b5-1 trading plans while possessing material non-public information about a significant risk to Ontrak’s largest customer.
This is the Justice Department’s first insider trading prosecution based exclusively on the use of a trading plan.
Accuracy
Peizer faces a maximum penalty of 25 years in prison on the securities fraud count and 20 years in prison on each of the insider trading counts.
Terren Scott Peizer, former CEO of Nevada-based health care company Ontrak, was convicted of a $12.5 million insider trading scheme in a federal court in Los Angeles.
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The article contains some inflammatory rhetoric and appeals to authority. It also uses a dichotomous depiction in describing the cybersecurity firm Kaspersky as either being a security threat or not. However, no formal fallacies were found.
. . .the Justice Department says’s the first case it has prosecuted exclusively based on a special trading plan that lets company insiders create a predetermined plan to sell shares while also setting limits on certain trading practices. Authorities say Peizer violated some of those limits when he set up plans in 2021 to sell shares of Ontrak, after learning the company’s largest customer was terminating its contract.
The cybersecurity firm Kaspersky has denied it is a security threat after the U.S. Commerce Department banned the use of its software in the United States. . .
Kaspersky said the government had based its decision on “geopolitical climate and theoretical concerns” rather than independently verifying if there was a risk.
