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U.S. v. Peizer: The First Insider Trading Prosecution Based on Rule 10b5-1 Plan Trading.

  • Published In: Securities Litigation Journal, 2025, v. 34, n. 1. P. 12 1 of 3

  • Database: Academic Search Ultimate 2 of 3

  • Authored By: Kaplan, Howard Jay 3 of 3

Abstract

The article discusses the implications of Rule 10b5-1, which allows corporate insiders to create prearranged trading plans for buying or selling stock, providing a defense against insider trading charges if executed in good faith without possessing material non-public information. It highlights the case of Terren Peizer, the former CEO of Ontrak, Inc., who was convicted of insider trading for using Rule 10b5-1 plans while in possession of non-public information about a major customer’s contract termination. The court found that Peizer's actions demonstrated fraudulent intent, rejecting his defenses related to compliance advice. Following this case, the SEC amended Rule 10b5-1 to mandate cooling-off periods in trading plans, emphasizing the need for good faith and full disclosure when seeking legal counsel. Peizer's sentencing is anticipated in early 2025, with a likely appeal to follow. [Extracted from the article]

Additional Information

  • Source:Securities Litigation Journal. 2025/04, Vol. 34, Issue 1, p12
  • Document Type:Article
  • Subject Area:Law
  • Publication Date:2025
  • ISSN:1936-7600
  • Accession Number:185323458
  • Copyright Statement:Copyright of Securities Litigation Journal is the property of American Bar Association and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

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