Former Ontrak CEO Terren Peizer, a protégé of Michael Milken, was sentenced to 3.5 years in prison for insider trading at his healthcare company. Peizer used a special trading plan called a “10b5-1” plan to sell shares and avoid losses when the company’s relationship with its largest customer, Cigna, deteriorated.
The plan allowed Peizer to sell shares at predetermined times, shielding him from accusations of selling too early due to negative corporate news. Prosecutors argued that Peizer used this plan to avoid losses, despite knowing Ontrak’s share price would fall after the company disclosed its relationship with Cigna was ending.
Peizer plans to appeal the conviction, which prosecutors believe sets a dangerous precedent for insider trading cases based solely on “10b5-1” plans. His lawyer described the outcome as a “true miscarriage of justice,” claiming Peizer obtained necessary approvals and disclosed his trading plans to Ontrak management.
In 2020, President Trump pardoned Milken, who pleaded guilty to securities fraud and served two years in prison after cooperating with the government’s case against him.
Source: https://nypost.com/2025/06/23/business/terren-peizer-protege-of-michael-milken-gets-3-1-2-years-prison-for-insider-trading