In First-of-Kind Case, DOJ Alleges Chairman Filed Trading Plans to Pull Off Vast Insider Trading Scheme
"Few things undermine trust in the markets more than insiders abusing their positions for personal advantage," SEC enforcement division director Gurbir Grewal said.
March 01, 2023 at 05:03 PM
4 minute read
White Collar Crime
The Department of Justice for the first time has charged an executive with fraudulent use of so-called 10b5-1 trading plans to commit criminal insider trading—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.
The DOJ on Wednesday unsealed an indictment alleging that Terren Peizer, chairman and former CEO of Los Angeles-based 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.
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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