Santa Monica CEO Convicted in Landmark Insider Trading Case

The Case Is Part of a Data-Driven Initiative by the Criminal Division’s Fraud Section

A federal jury in Los Angeles has convicted Terren S. Peizer, the former CEO and chairman of Ontrak Inc., a publicly traded healthcare company, of engaging in an insider trading scheme using Rule 10b5-1 trading plans.

Peizer, 64, a resident of Santa Monica, California, and Puerto Rico, avoided more than $12.5 million in losses by selling shares based on non-public information regarding the potential termination of a major contract, according to court documents and evidence presented at trial. He was found guilty of one count of securities fraud and two counts of insider trading. 

His sentencing is scheduled for October 21, with potential penalties of up to 25 years for securities fraud and 20 years for each insider trading count.

“When Terren Peizer learned significant negative news about Ontrak, he set up Rule 10b5-1 trading plans to sell shares before the news became public and to conceal that he was trading on inside information,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division, in a released statement. “This is the Justice Department’s first insider trading prosecution based exclusively on the use of a trading plan, but it will not be our last.”

Peizer established his first Rule 10b5-1 trading plan in May 2021, shortly after learning about the deteriorating relationship between Ontrak and its largest customer. 

He adopted a second plan in August 2021, minutes after being informed that the contract was likely to be terminated. Despite warnings from multiple brokers and Ontrak’s compliance officers, Peizer began selling shares the next trading day after establishing each plan. On August 19, 2021, Ontrak announced the termination of the contract, leading to a 44% drop in its stock price.

“Corporate executives and other insiders hold major power in our economy, but with that power comes responsibility,” said U.S. Attorney Martin Estrada for the Central District of California. “Today’s verdict sends a clear message that everyone, including corporate executives, must abide by the law.”

Acting Assistant Director in Charge Krysti Hawkins of the FBI Los Angeles Field Office stated, “The FBI is committed to investigating illegal trading practices and holding offenders accountable to ensure fairness and trust in the marketplace.”

The case is part of a data-driven initiative by the Criminal Division’s Fraud Section to identify abuses of Rule 10b5-1 trading plans, which are meant to allow corporate insiders to sell stock without facing insider trading charges. 

However, the plans offer no protection if an executive is in possession of material, non-public information when entering the plan or if the plan is established in bad faith.

in Hard, News
Related Posts

Summer at Annenberg:Swim Daily and Watch the Sunset

July 12, 2024

July 12, 2024

By Susan Payne A unique, inclusive community destination along the Pacific Coast Highway of Santa Monica is inviting you to...

Both Drivers Have Been Identified in Fatal Malibu Crash on July 4

July 12, 2024

July 12, 2024

Collision on Pacific Coast Highway Leaves One Driver Dead Law enforcement officials have identified the drivers in the tragic accident...

This Homeless Santa Monica Resident Saved a Teenage Girl From a Vicious Attack

July 12, 2024

July 12, 2024

City Council’s Commendation for Wilker Was Made at Its Most Recent Meeting on July 9 By Zach Armstrong Santa Monica City...

Will Pali Rec Center’s New Playground be Ocean, Forest, or Desert Themed?

July 11, 2024

July 11, 2024

Feedback on the Designs Will Be Shared With the Palisades Palisades Park Advisory Board By Zach Armstrong The Palisades community...

(Video) Renowned Soprano Singer to Make L.A. Homecoming at Broad Stage

July 11, 2024

July 11, 2024

Golda is scheduled to perform on July 13 at 8 p.m. @palisadesnews This Saprano singer is set to take the...

Reward Offered for Information on Abused German Shepherd Found Near Malibu Creek Canyon

July 11, 2024

July 11, 2024

Groups Seek Justice for Argon, Dog Discovered with Zip-Tied Mouth and Neck In Defense of Animals and Peace 4 Animals are...

Council Approves Five-Year-Plan to Improve Big Blue Bus Services

July 11, 2024

July 11, 2024

The Initiative Aims to Expand Operating Hours, Improve Connectivity, and Create More Frequent Service By Zach Armstrong A five-year plan from...

A Homeless Man in a Palisades Canyon Was Found With a Revolver. Its Property Owner Has Neglected the Site for Years

July 10, 2024

July 10, 2024

The Entire Canyon Is Now a Significant Fire Hazard, According to Officials By Zach Armstrong Within a Pacific Palisades canyon,...

LAPD Detectives and LASD Nab Group Responsible for Over 30 Residential Burglaries

July 10, 2024

July 10, 2024

“Reflector Vest Crew” Burglary Suspects Arrested in Los Angeles In collaboration with the Los Angeles County Sheriff’s Department Major Crimes...

Santa Monica Artist Dave Quick’s “Return from the Burn” Exhibition to Open at Bergamot’s Lois Lambert Gallery

July 10, 2024

July 10, 2024

Pre-Burning Man Showcase Features Kinetic Art and Sculptures Coated with Playa Dust, Opens July 13 With upwards of 80,000 attendees,...

Palisades’ Vons Market Among Hundreds to be Sold Under Merger Plan

July 10, 2024

July 10, 2024

The Sale Is Intended to Satisfy Regulators By Zach Armstrong The Vons supermarket in the Pacific Palisades, located at 17380...

United Plane Loses Tire During LAX Takeoff; Man Tasered in Separate Airport Incident

July 9, 2024

July 9, 2024

Tire Incident Was the Second in Four Months, Plane Landed Safely  Early Saturday morning, a shirtless and barefoot man experiencing...

(Video) Newly Rebranded Santa Monica Hotel Shines a New Light on the Neighborhood

July 9, 2024

July 9, 2024

The Revitalized Business is Also Available For Events @palisadesnews The newly rebranded Santa Monica Hotel casts a new light on...

Award-Winning Soprano Makes Broad Stage Debut

July 9, 2024

July 9, 2024

Golda Zahra to Perform in LA July 13 By Susan Payne Renowned Soprano Golda Zahra is making her homecoming back...

Electric Lodge Hosts Summer Empowerment Fair

July 9, 2024

July 9, 2024

Performing Arts Center Partners with LADWP By Susan Payne Performance. Sustainability. Community. These are three virtues leading the charge for...