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Florida Exec’s Insider Trading Scheme Lands Him 42 Months in Prison
LOS ANGELES – Terren Scott Peizer, 65, a resident of Puerto Rico and Santa Monica, was sentenced to 42 months in federal prison for engaging in an insider trading scheme that cost investors over $12.5 million.
Peizer, the former CEO and chairman of the board of directors of Ontrak Inc., a Miami, Florida-based publicly traded health care company, was found guilty of securities fraud and insider trading by a jury in June 2024. The conviction marked the first insider trading prosecution based exclusively on the use of Rule 10b5-1 trading plans.
“Terren Peizer betrayed the trust of Ontrak’s investors, trading on inside information to offload company stock before a substantial price decline,” said Matthew R. Galeotti, Head of the Justice Department’s Criminal Division. “Today’s sentence reflects the Criminal Division’s hard work and commitment to prosecuting frauds that harm American investors.”
According to the investigation, Peizer used two Rule 10b5-1 trading plans to avoid losses of over $12.5 million. He entered into the first plan in May 2021 after learning that Ontrak’s largest customer was considering terminating its contract. Peizer then entered into a second plan in August 2021, just one hour after the customer confirmed its intention to terminate the contract. Despite warnings from brokers and attorneys, Peizer began selling shares of Ontrak on the next trading day after establishing each plan.
The FBI investigated the case with assistance from the Financial Industry Regulatory Authority’s (FINRA) Criminal Prosecution Assistance Group. The U.S. Attorneys Office and Matthew Reilly of the Justice Department’s Criminal Division’s Fraud Section prosecuted the case, with Assistant United States Attorney Jonathan S. Galatzan handling the forfeiture proceedings. Peizer was also ordered to pay a $5.2 million fine and forfeit $12.7 million in ill-gotten gains.
The case marks a significant victory for the Justice Department in its efforts to combat insider trading and protect American investors. As U.S. Attorney Bill Essayli noted, “Insiders must not be allowed to put their thumbs on the scales of the stock market. Individuals who impugn the integrity of our markets can and will face prison time for their crimes.”
In addition to his prison sentence, Peizer’s conviction serves as a warning to corporate executives who engage in similar schemes. As the Justice Department continues to prioritize the prosecution of insider trading cases, investors can be assured that those who break the law will face severe consequences.
The investigation and prosecution of Peizer’s insider trading scheme were part of a broader data-driven initiative led by the Justice Department’s Criminal Division’s Fraud Section to identify executive abuses of 10b5-1 trading plans. The case serves as a reminder that the use of these plans can be a defense to insider trading charges, but only if they are entered into in good faith and not as part of an effort to evade the law.
Peizer’s sentence brings an end to a lengthy and complex investigation that highlighted the importance of transparency and accountability in the financial markets. As the Justice Department continues to prioritize the prosecution of financial crimes, investors can be assured that those who break the law will face severe consequences.
Key Facts
- State: California
- Agency: DOJ USAO
- Category: Fraud & Financial Crimes
- Source: Official Source ↗
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