Officials unsealed an indictment Wednesday against Terren Peizer, the chairman and CEO of publicly traded healthcare company Ontrak Health, alleging he oversaw an insider trading scheme, in violation of Securities and Exchange Commission rules, according to court documents. Photo courtesy of Ontrak Health
March 1 (UPI) — Officials unsealed an indictment Wednesday against the chairman and CEO of publicly traded healthcare company Ontrak Health, court documents show.
The charges against Terren Peizer allege he oversaw an insider trading scheme, in violation of Securities and Exchange Commission rules.
Peizer is also the company’s founder, moving back into the chief executive role in August 2022.
The company’s common shares dipped 0.16% on the Nasdaq stock market Wednesday, trading at 62 cents.
The company had not commented on the indictment as of 5 p.m. EST Wednesday.
Prosecutors allege Peizer avoided more than $12.5 million in losses, acting on information which was not publicly available at the time. They contend he knew one of the company’s largest customers was considering not renewing its contract.
The client later terminated the contract, which saw the company’s stock drop by more than 44%.
The scheme allegedly took place between May and August 2021, violating the SEC’s rule 10b5-1 on two separate occasions by failing to observe the “cooling off” period.
Peizer faces one count of engaging in a securities fraud scheme and two counts of securities fraud for insider trading.
He faces a maximum sentence of 25 years in prison for the securities fraud scheme charge, and an additional 20-year prison sentence for each insider trading charge, if convicted.
Based in Henderson, N.V., Ontrak is an AI-powered health technology company.
“Mr. Peizer is accused of using his insider knowledge as CEO of a publicly traded company to line his own pockets in violation of his duty to his company and its shareholders,” U.S. Attorney Martin Estrada said in a statement.
“Mr. Peizer allegedly exploited material nonpublic information and tried to shield himself with a rule designed to ensure a fair and level playing field for all investors.
“With this indictment, we again affirm that the law applies equally to all and that corporate executives who unlawfully denigrate the integrity of our financial markets will be held accountable.”
The investigation was led by the Justice Department’s Fraud Section.