The Department of Justice on Wednesday unsealed an indictment alleging that Terren Peizer, chairman and former CEO of telehealth provider Ontrak, dumped more than $20 million in company stock between May 2021 and August 2021 based on inside knowledge that it was about to lose a contract with Cigna, its largest customer. This marks the first criminal case involving the use of a special trading plan designed to help shield executives from such charges. This is the latest sign of regulators' concern that the plans, created more than two decades ago to tamp down the potential for illegal trading on nonpublic information, are being abused.
Authorities allege that Peizer, 63, dodged more than $12.7 million in losses by creating and trading on two 10b5-1 plans after learning that Cigna was going to cease doing business with Ontrak, which provides behavioral health services to large insurers.
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