(Reuters) – Health care company Ontrak Inc’s Chief Executive Officer Terren Peizer resigned on March 2, the company said in a filing, a day after U.S. authorities charged him with insider trading.
Peizer sold more than $20 million of Ontrak stock between May and August 2021 while in possession of material non-public negative information related to the company’s largest customer, authorities said.
The charge marks the first criminal case involving the use of a special trading plan designed to help shield executives from such charges. Executives can use trading plans under rule 10b5-1 as a defense against insider trading charges by planning to sell shares in advance at predetermined times.
But the prearranged stock selling programs have come under criticism in response to a growing body of academic research indicating some executives have used them for suspiciously well-timed trading.
Brandon LaVerne, who has been the company’s chief operating officer since 2022, will be the interim chief executive.
LaVerne has also served as Ontrak’s chief financial officer from March 2020 to June 27, 2022.
(Reporting by Kannaki Deka in Bengaluru; Editing by Krishna Chandra Eluri)
