The SEC on Wednesday filed parallel charges against Peizer.

"Today's action comes the week that updated amendments to Rule 10b5-1 become effective," SEC Chair Gary Gensler said in a statement. "These reforms to Rule 10b5-1 will further help prevent unlawful trading by executives on the basis of non-public information and help build greater confidence in the market."

Ontrak is an AI and telehealth-enable health care company that provides behavioral health services and primarily works with insurance companies. Ontrak did not respond to a request for comment from Law.com. Peizer did not respond to an inquiry from ALM, but his attorney, David Willingham of King & Spaulding, said in an emailed statement: "The government has clearly overreached in this case, especially since they have disregarded the good faith discussions regarding the facts and circumstances of this inquiry which took place before these cases were filed without any prior notice."

According to the indictment, Peizer first learned between March 2021 and May 2021 that Ontrak was in serious danger of losing its Cigna contract. Peizer stepped down as CEO in March of that year and became executive chairman, a role that continued to give him access to nonpublic information.

Authorities say Peizer verified when he set up of the 10b5-1 plans that he was not aware of any material nonpublic information, despite his knowledge of the unraveling Cigna relationship.

Under the first plan, he sold nearly 600,000 Ontrak shares worth more than $19.2 million. The indictment says Peizer was warned by two brokers that his plan lacked the required "cooling-off period" so there was more time between when he entered the plans and when the stock was sold, but he began selling the shares the day after establishing the plans.

In August of that year, just one hour after learning that Cigna was on the verge of terminating its contract, he sold roughly 45,000 Ontrak shares under a second 10b5-1 plan, this time worth more than $1.9 million.

Ontrak's stock price fell 44% when it finally disclosed the information publicly a week later in an 8-K filing. Shares now trade for about 63 cents apiece.

Gurbir Grewal, SEC enforcement division director, said Peizer used his inside knowledge to avoid millions in losses suffered by ordinary investors.

"That's insider trading, even when the trading is done through a 10b5-1 trading plan," he said. "Few things undermine trust in the markets more than insiders abusing their positions for personal advantage; the SEC remains committed to investigating such abuse and holding bad actors accountable."

Peizer is charged with one count of engaging in a securities fraud scheme and two counts of securities fraud for insider trading. He faces a maximum penalty of 25 years in prison for the first count, and 20 years for each count of insider trading.

"Today's groundbreaking insider trading indictment demonstrates that the Department of Justice, together with our law enforcement partners, will not allow corrupt executives to misuse 10b5-1 plans as a shield for insider trading," Assistant Attorney General Kenneth Polite Jr. of the Justice Department's Criminal Division said in a statement.

Ontrak is one of a string of biotech companies where Peizer has served as a senior executive. He founded the business in 2003. Earlier in his career, he worked at Goldman Sachs, First Boston and as a bond salesman at Drexel Burnham Lambert.