On June 23, 2025, a judge in the U.S. District Court for the Central District of California sentenced Terren Scott Peizer – the former CEO and chairman of the board of directors of health care company Ontrak, Inc. – to 42 months in prison for his role in an insider trading scheme involving trades in Rule 10b5-1 stock trading plans. Rule 10b5-1 trading plans usually serve as a defense to insider trading for executives and corporate insiders, enabling them to buy or sell shares on predetermined date as long as the plan is formed in good faith and not by an executive in possession of material nonpublic information (“MNPI”). The Rule also requires participating executives to certify that these trades are not the influenced by MNPI. The sentencing comes approximately a year after a federal jury found Peizer guilty of one count of securities fraud and two counts of insider trading. Peizer has additionally been ordered to pay a $5.25 million fine and forfeit more than $12.7 million in ill-gotten gains. According to the DOJ, this is the first insider trading prosecution that solely involves the use of Rule 10b5-1 trading plans.
According to court documents and evidence presented at trial, Peizer was able to avoid more than $12.5 million in loses using two Rule 10b5-1 trading plans. Peizer allegedly entered into the first trading plan in May 2021 after learning that the company’s contract with one of its largest customers was deteriorating and reportedly established the second trading plan in August 2021 just minutes after he was informed that the customer would likely terminate the contract. The contract was allegedly terminated by the customer just six days after the second trading plan was formed – an announcement that caused Ontrak’s stock price to drop by more than 44 percent. Despite warnings received from two brokers, attorneys, and a senior Ontrak executive, Peizer also allegedly refused to engage in a “cooling-off” period when establishing the plans, choosing instead to sell share shares of Ontrak stock the next trading day after establishing each plan.
The Securities and Exchange Commission has also charged Peizer and his personal investment vehicle, Acuitas Group Holdings LLC, with insider trading in connection with the trades made using the two Rule 10b5-1 stock trading plans. Specifically, Peizer and Acuitas have been charged with violating antifraud provisions in Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act. Peizer is additionally charged under Section 20(a) of the Exchange Act with control personal liability. The SEC’s case against Peizer and Acuitas continues.
DOJ Press Release | Judgment | First Superseding Indictment | SEC Complaint