'Pharma Bro' Martin Shkreli is in trouble with regulators again, this time for influencing biopharma stocks

By Jaimy Lee

The Federal Trade Commission and seven states say Shkreli should be held in contempt

Martin Shkreli was found guilty in 2017 of two counts of securities fraud and one count of conspiracy to commit securities fraud.

Martin Shkreli, a former hedge-fund manager known as "Pharma Bro," is back in the crosshairs of U.S. regulators for influencing biopharma stocks even though he is banned from being involved with the industry.

Shkreli came to prominence a decade ago for buying the rights to Daraprim, a drug used to treat a rare parasitic infection known as toxoplasmosis that primarily affects people who are immunocompromised. He then significantly hiked the price of the medication - from $17.50 a tablet to $750 - at a time when the debate over soaring drug prices had gone mainstream.

But the drug-pricing controversy was not what landed Shkreli in jail. In 2017, he was convicted of two counts of securities fraud and one count of conspiracy to commit securities fraud. The criminal case was brought by federal prosecutors and was related to the activities of his hedge fund and a biotech company.

Shkreli subsequently faced a judgment in a civil case brought by the Federal Trade Commission and several states related to the Daraprim price hike. In that case, a federal judge ruled that Shkreli had to hand over $64 million and banned him from working in the biopharmaceutical industry.

On Tuesday, the FTC and seven states filed a motion in federal court in Manhattan, arguing that Shkreli should be held in contempt for violating a lifetime ban that prevents him from participating in the biopharma industry.

Shkreli did not immediately respond to requests for comment.

"His ongoing efforts to participate in the pharmaceutical industry, despite the court-ordered ban, reflect a deliberate pattern of defiance that undermines the purpose and efficacy of the court's remedy and the law," FTC Commissioner Mark Meador said in a statement.

Since being released from prison in 2022, Shkreli has returned to sharing his views on industry stocks on social media. As recently as Monday, he questioned the results of Bristol Myers Squibb's (BMY) successful Phase 3 trial of an experimental treatment for a chronic lung disease that is a major area of focus for several drugmakers. "Low dose good," he posted on X. "High dose bad. Effect size bad. Drug is bad."

Three days earlier, he described Moderna (MRNA) as a "great short if you can tough it out and wait six months." Moderna is getting ready to share highly anticipated full Phase 3 data for a therapeutic cancer vaccine it's developing with Merck (MRK) later this month at a medical conference in Madrid.

The FTC claimed in a legal filing that Shkreli violated the lifetime ban by trading at least 60 pharmaceutical stocks and then sharing his opinions on sites like Reddit, X and YouTube about how those companies are run. The FTC said in its legal filing that during a livestream, Shkreli told his viewers: "I'm showing you how to trade and invest in biotech."

Before his legal troubles, Shkreli was viewed as a brash outsider. He showed up in a hooded sweatshirt to a staid industry conference to criticize the industry and argue that drug prices should be higher. He also famously bought the only version of a Wu-Tang Clan album for $2 million (it was later seized) and tweeted that lawmakers were "imbeciles" after testifying on Capitol Hill.

The federal regulator wants him to divest all pharmaceutical stocks, pay fines equal to any profits from trading those stocks, and be subject to financial penalties and more prison time if he violates the court order.

-Jaimy Lee

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