Ontrak Chairman charged with insider trading

The Securities and Exchange Commission (SEC) on Wednesday charged Terren Peizer, Executive Chairman of health tech company Ontrak (NASDAQ:OTRK), with insider trading for avoiding more than ~$12M losses while in possession of material nonpublic information.

The case filed in U.S. District Court in the Central District of California against Peizer and his investment vehicle Acuitas Group Holdings, LLC, seeks, among other things, civil penalties and a ban on Peizer from holding positions as an officer and director.

The complaint alleges that Peizer sold more than $20M Ontrak (OTRK) shares through his two Rule 10b5-1 trading plans between May and August 2021 while knowing that the company’s relationship with its largest customer was at risk.

In August, Ontrak (OTRK) announced that the customer had ended its contract, sending the company shares more than 44% lower, while, according to SEC, Peizer avoided more than $12.7M losses due to prior execution of trading plans.

“We allege that Mr. Peizer, armed with inside knowledge, avoided millions in losses that ordinary investors suffered. That’s insider trading, even when the trading is done through a 10b5-1 trading plan,” Gurbir Grewal, director of the SEC’s enforcement division.

In December, Ontrak (OTRK) received Nasdaq non-compliance notice over the minimum bid price requirement related to its preferred stock.