Terren Peizer, former chairman of the healthcare company Ontrak, was convicted of insider trading despite using a 10b5-1 trading plan. A 10b5-1 trading plan provides affirmative defenses for corporate insiders and companies to buy and sell company stock as long as the plan was established in good faith at a time when that person or entity was unaware of material non-public information, even if actual trades made pursuant to the plan are executed at a time when the person or entity may be or is aware of material, non-public information. Peizer was accused of trading based on confidential information about Ontrak’s likelihood to lose Cigna as a major customer. Although Peizer was not in charge in dealing with Cigna, executives updated him about the efforts to save the $90mn deal. Peizer started trading a week before Ontrak’s intention to end the contract with Cigna. He now faces a maximum penalty of 25 years in prison on one securities-fraud charge and 20 years in prison on each of two insider-trading counts. https://www.wsj.com/finance/regulation/jury-convicts-milken-protege-terren-peizer-of-insider-trading-7c78ba2a
Ex-Ontrak Chairman Convicted of Insider Trading
