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Former Chairman and CEO of Ontrak, a publicly traded healthcare firmNASDAQ: OTRK) was convicted Friday of a multimillion-dollar insider buying and selling scheme.
Los Angeles federal jury convicts Terren Scott Peizer of 1 depend of securities fraud and two counts of insider buying and selling.
A press release mentioned that is the primary case the Justice Division has prosecuted completely underneath Rule 10b5-1. The principles enable firm insiders to create predetermined plans to promote inventory whereas additionally putting restrictions on sure buying and selling practices.
Prosecutors mentioned Peizer violated a few of these restrictions when he hatched a plan to promote inventory in 2021 to keep away from losses of greater than $12.5 million. He bought the shares after studying that Ontrak (OTRK), its largest buyer on the time, would signal on with the corporate, in response to authorities.
Shares of Ontrak (OTRK) plunged about 44% after information of the termination of the contract got here to mild.
“That is the Division of Justice’s first insider buying and selling prosecution primarily based solely on the usage of a buying and selling scheme, however it is not going to be our final,” mentioned Deputy Assistant Lawyer Normal Nicole M. Argentieri, head of the Justice Division’s Legal Division. “We is not going to enable company executives who commerce on inside info to cover behind their maliciously crafted buying and selling plans.”
In keeping with the Related Press, Pez’s attorneys mentioned they might attraction, and testimony confirmed that Pez’s actions weren’t malicious as a result of he formulated the transaction plan with the recommendation of his administration workforce.
Sentencing is scheduled for October. Peizer, 64, faces as much as 25 years in jail for securities fraud and as much as 20 years in jail on every depend of insider buying and selling. He resigned as CEO in March 2023 after being indicted.
