Terren Peizer, CEO of telehealth company Ontrak, has been indicted for insider trading to avoid millions of dollars in losses, according to a March 1 Justice Department news release.
Mr. Peizer is accused of selling stake in the company after learning Ontrak's largest customer, Cigna, planned to terminate its contract. The information about Cigna's plans was not public when Mr. Peizer entered into two Rule 10b5-1 trading plans, which allowed him to avoid $12.5 million in losses, according to court documents.
Two brokers advised Mr. Peizer to engage in a "cooling off" period so there was more time between when he entered into the plans and when the stock was sold, but he allegedly refused and began selling his shares the day after establishing the plans. Six days after Mr. Peizer began his second Rule 10b5-1 trading plan, Ontrak reported it no longer had a contract with Cigna and stock prices plummeted 44 percent.
The charges against Mr. Peizer include securities fraud and insider trading.