The Securities and Exchange Commission moved on August 7 to dismiss its civil insider trading lawsuit against Terren Peizer, the former CEO of healthcare company Ontrak, after Peizer received a pardon tied to his conviction.
Peizer was found guilty by a federal jury in Los Angeles in 2024 on two counts of insider trading and one count of securities fraud. Prosecutors said he sold more than $20 million worth of Ontrak stock between May and August 2021 while he was aware of material, non-public negative information concerning the company’s largest customer. He was sentenced in 2025 to three and a half years in prison.
The SEC’s decision to walk away from its parallel civil case follows a pardon controversy that has drawn comparisons to a 2020 case: financier Michael Milken, who pleaded guilty decades earlier to securities fraud and served roughly two years in prison, was pardoned by President Trump during his first term. Critics have pointed to both cases as examples of a double standard in how white-collar offenders are treated compared with other categories of defendants facing fraud-related charges.
The dismissal effectively closes the book on one of the more closely watched healthcare insider trading prosecutions of the past two years, though it leaves open broader questions about the SEC’s ability to pursue civil remedies once a criminal conviction has been undone through executive clemency. Peizer’s case had been seen as a cautionary tale for pharma and healthcare executives about the risks of trading around negative material information — the dismissal may now complicate that deterrent effect.
Legal observers note that a presidential pardon typically addresses criminal liability but does not automatically erase civil liability, which made the SEC’s decision to voluntarily drop its suit notable. The agency has not detailed its full reasoning beyond acknowledging the changed legal landscape following the pardon.
The case is likely to remain a reference point in discussions about executive accountability in the pharmaceutical and healthcare sectors, particularly as it intersects with an increasingly active pardon environment. Compliance officers at publicly traded healthcare companies have flagged the outcome as a reminder that regulatory enforcement outcomes can shift substantially after the fact, even in cases that reached a jury verdict and sentencing.