In what the agency says is the first prosecution of its type, the U.S. Department of Justice has brought criminal charges against Terren Peizer, the Executive Chairman of the healthcare company Ontrak, alleging that the executive improperly used Rule 10b5-1 trading plans to sell shares in the company ahead of the company’s disclosure of bad news. The SEC has separately brought a civil enforcement action against Peizer based on the same allegations. The government alleges that Peizer set up the plans while aware of the undisclosed bad news and that his stock sales allowed him to avoid more than $12.7 million in losses.
A copy of the U.S. Department of Justice’s March 1, 2023 press release about Peizer’s prosecution can be found here, and the February 24, 2023 grand jury indictment of Peizer can be found here. The SEC’s March 1, 2023, press release can be found here, and its complaint against Peizer can be found here.Continue Reading First-Ever Criminal Action Charges Exec with Misuse of Rule10b5-1 Trading Plans
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Since it was first instituted nearly 21 years ago, 
In a development that will come as a surprise to no one who has been reading the business news pages over the last few weeks, Eastman Kodak and certain of its executives have been hit with a securities class action lawsuit based on allegations surrounding the disclosure of a $765 loan to the company from a government agency for the company to develop pharmaceutical materials, including ingredients of COVID-19 drugs, as well as on allegations of insider trading relating to the loan disclosures. As discussed below, the lawsuit is the latest in a series of securities class action lawsuits that have been filed related to the coronavirus outbreak. The complaint in the Kodak lawsuit can be found 
Companies navigating the current heath crisis and dealing with its financial effects face a number of risks. Among the many risks is the possibility of business litigation. For publicly traded companies, the litigation risks include the possibility of securities class action litigation. Even in the midst of a pandemic, the steps companies can take to try to mitigate their securities class action litigation remain the same – manage disclosures, control insider trading, and handle bad news appropriately, among other things – but the coronavirus outbreak has added new dimensions to these steps. Well-advised companies will be making the appropriate adjustments, and, as discussed below, D&O insurance underwriters will be (or perhaps, should be) monitoring companies closely to see which companies are making the adjustments.
In several recent conversations, I have been asked whether I thought that the whole #MeToo movement might have more or less played out, and that we might not be seeing as many, or even any, more D&O claims based on underlying allegations of sexual misconduct. In response, I said that I didn’t think the phenomenon had played out but I did suggest that I thought that the phenomenon might be shifting and that the kinds of underlying allegations would change. Although it does not represent exactly the kind of thing I had in mind, a new securities class action lawsuit filed against Teladoc Health and based on alleged misconduct of one of its senior executives does at least represent a variant on the kinds of D&O claims following in the wake of allegations of sexual misconduct.
The SEC’s disclosure that its EDGAR system had been had hacked was big news last week, as was the accompanying disclosure that the information accessed may have been used for improper trading. In the following guest post, John Reed Stark takes a look at the interesting and important legal issues that might arise if the authorities were to try to pursue claims against persons trying to trade on the information stolen from the SEC. John is President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement. I would like to thank John for his willingness to allow me to publish his article on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s guest post.
Seventeen years ago this month, the SEC instituted 
In the D&O insurance world, private company liabilities, exposures, and insurance are viewed as categorically distinct from public company liabilities, exposures, and insurance. There are completely separate and distinct insurance policy forms for each of the two categories of companies. In this traditional view, one of the key distinctions between two kinds of companies is the potential liability of public companies and their directors and officers under the federal securities laws. However, it has recently become apparent to me that this perceived difference between the two categories of companies may be less distinct than I had perceived. For example, as I noted in a