The Facts

By the morning of May 10, 2021, Ontrak’s relationship with its largest remaining customer was in trouble. The customer had questioned the behavioral-health program’s costs and savings, sharply reduced the number of members it sent for potential enrollment, and warned that it couldn’t continue under the existing contract terms, according to the SEC.

That day, Peizer emailed Ontrak’s chief executive asking for “any read of the tea leaves?” He also adopted a stock-sale plan covering 596,357 shares held through Acuitas. The plan instructed a broker to begin selling 11,000 shares a day on May 11, with the possibility of additional sales at specified prices.

A second plan followed on August 13. Earlier that day, the SEC says, an Ontrak sales employee told Peizer that he believed the customer would terminate. The new plan covered another 463,567 shares and likewise began selling on the next trading day.

Why One Customer Mattered So Much

Ontrak contracted with health plans to identify members whose chronic conditions might improve through behavioral changes and enroll them in additional healthcare services. Its customers paid fees based on enrollment. More participating members meant more revenue.

The company had recorded significant net losses and negative operating cash flow since its 2003 inception, according to the complaint’s account of Ontrak’s filings. In its March 2021 annual report, Ontrak said its ability to keep funding operations depended on increasing enrollment.

Customer concentration made every major contract consequential. On March 1, 2021, Ontrak announced that its then-largest customer, identified in the complaint as Customer B, would terminate its agreement. The stock closed down more than 46% that day. Peizer’s holdings lost more than $265 million in value, the SEC says.

Attention then shifted to Customer A. Ontrak publicly described that contract as a source of replacement growth. Customer A’s members represented 67% of remaining program participants after Customer B’s departure. Revenue from Customer A reached 52.3% of Ontrak’s total revenue during the second quarter of 2021.

The SEC’s theory of materiality is straightforward: a reasonable investor would care that a customer responsible for roughly half the company’s revenue was considering leaving—especially after the previous major customer’s departure had already cut the stock price nearly in half.

Warning, Sale, Disclosure

The chronology is more useful than the complaint’s legal labels. It places repeated internal warnings beside the creation of the trading plans and the sales they triggered.

How the Trading Plans Worked

Rule 10b5-1 plans exist because corporate insiders routinely encounter information the market doesn’t have. An insider can give a broker advance instructions covering the number, timing or price of future trades. If the plan is properly adopted before the insider learns material nonpublic information, later automated trades may continue even after the insider receives confidential news.

The legal protection is an affirmative defense: the person invoking it must show that the plan met the rule’s requirements. Under the version in effect during 2021, federal rules didn’t require a mandatory waiting period between adoption and the first trade. The SEC’s complaint says the plan still had to be created before the insider became aware of material nonpublic information and had to be adopted in good faith.

Peizer first approached a brokerage that required at least a 14-day delay. He declined to establish a plan there and moved to a second broker that would permit immediate sales, according to the complaint. Employees at both firms raised cooling-off periods. One advised that 30 days was an industry best practice. Both of Peizer’s plans used zero days.

The absence of a waiting period isn’t presented as a standalone violation. It matters because the sales began immediately, leaving almost no time for confidential information to become public or stale. The SEC adopted amendments addressing cooling-off periods in December 2022, after the trades at issue.

What the SEC Says Peizer Knew

The first plan came before Customer A’s explicit May 18 statement that it intended to leave. The SEC therefore builds its case around what Peizer allegedly knew before May 10: Customer A had raised concerns about cost and savings, warned it couldn’t continue under the current terms, reduced a monthly list of potential enrollees from more than 2,000–4,000 members to 51, and received substantial fee concessions from Ontrak.

Peizer’s own messages form a central part of that account. During April, he repeatedly told colleagues that Ontrak needed to “save” Customer A. On April 24, after a postponed meeting, he compared the situation to the customer loss that had just caused a 46% stock decline. On April 30, after an update from Ontrak’s CEO, he wrote: “Doesn’t sound optimistic.”

“This feels eerily like [Customer B].”Text attributed to Peizer on April 24, 2021, as quoted in the SEC complaint

For the second plan, the information was more direct. On May 18, the CEO had told Peizer that Customer A intended to end the relationship and that the decision had been made. By July, the customer had stopped sending any members for enrollment. On August 13, the day of the second plan, the sales employee responsible for Customer A reportedly told Peizer he thought termination was coming.

Each plan nevertheless contained Peizer’s representation that he was “not aware of any material nonpublic information concerning the Issuer or its securities.” The SEC alleges those representations were false. That allegation remains a matter for adjudication on the record supplied here.

Who Lived With the Consequences

Shareholders

Investors who continued holding Ontrak through the announcement saw the closing share price fall from $21.05 to $11.68 in one trading day. The SEC alleges that Peizer and Acuitas avoided at least $12,711,324 in losses by selling before that decline.

That avoided-loss figure isn’t the same as a calculation of money taken from identified investors. The complaint doesn’t name the buyers on the other side of the trades or quantify each shareholder’s loss. It documents a stark information difference: the market didn’t know that Customer A was preparing to leave while, according to the SEC, Ontrak’s executive chairman did.

Workers

Ontrak laid off certain employees on July 16, 2021. An internal memo said its outreach and enrollment pools weren’t growing quickly enough to support the staffing then in place. The complaint doesn’t state how many workers lost their jobs, and it doesn’t attribute the layoffs solely to Customer A. It does place the cuts in the same period when Customer A was throttling and then stopping new enrollment lists.

Health-plan members

The operational contraction also reached the program’s enrollment pipeline. Customer A had previously supplied monthly lists of more than 2,000–4,000 members for potential enrollment; in April 2021, it sent 51, and by July it sent none. The source doesn’t establish that these members lost healthcare, suffered worse outcomes or were denied alternative services. Any claim of patient harm would go beyond the evidence in the complaint.

The company’s outlook

Ontrak said the termination wouldn’t materially alter its 2021 revenue and margin expectations. The effect on the following year was much larger. Its stated expectation of nearly $50 million in 2022 revenue was 57% below analysts’ prior estimate of about $118 million, according to the complaint.

What the SEC Asked the Court to Do

The SEC accused Peizer and Acuitas of violating federal antifraud provisions governing securities transactions. It also asserted an alternative “control person” claim against Peizer based on his ownership and control of Acuitas.

The regulator requested permanent injunctions, repayment of allegedly ill-gotten gains with prejudgment interest, civil penalties and an order barring Peizer from serving as an officer or director of a public company. It demanded a jury trial.

Those requests are remedies sought by the SEC, not penalties already imposed. The complaint supplied for this article does not show that a court granted them.

What Has—and Hasn’t—Been Decided

The source establishes that the SEC filed its case on March 1, 2023, and records the factual account and legal theories the agency placed before the court. It does not contain a judicial finding that Peizer possessed material nonpublic information, acted with the required intent or recklessness, made false representations, or violated securities law.

It also doesn’t supply Peizer’s or Acuitas’s response. Their defenses, any disputed evidence and the case’s later procedural history can’t be determined from this document alone.

The crucial unresolved question is whether the information Peizer possessed when each plan was adopted legally qualified as material and nonpublic—and whether the plans were created in good faith. The SEC’s detailed chronology is its evidence for answering those questions. A complaint is not the answer itself.

The Unresolved Record

The SEC’s filing offers dates, messages, revenue figures, brokerage communications and trade totals. What the supplied record cannot show is how the defendants answered that evidence or what a court ultimately concluded. Without those later materials, the proper endpoint is narrower: two no-wait plans converted confidentially timed decisions into more than $20 million in pre-announcement sales, and the SEC alleged that the legal protection those plans appeared to offer never applied.