The Federal Trade Commission and seven states asked a federal judge Tuesday to hold Martin Shkreli in civil contempt. They allege the former drug executive “flagrantly and repeatedly violated” the 2022 order that banned him from the pharmaceutical industry for life.
Trading Biotech on Camera
The joint motion was filed in the U.S. District Court for the Southern District of New York and alleges Shkreli has traded shares of at least 60 pharmaceutical companies since he left prison in May 2022. Regulators say he also used livestreams and posts on YouTube, X and Reddit to share his views on how drugmakers are run.
Benzinga has reached out to Shkreli for comment and will update this story if he responds.
The 2022 injunction bars Shkreli from “directly or indirectly participating in any manner in the pharmaceutical industry.” It specifically prohibits owning a stake in a drug company or trying to influence how one is managed, according to the FTC.
While livestreaming his trades, Shkreli has told viewers, “I’m showing you how to trade and invest in biotech,” the filing alleges. In another stream, he described his “magic trick”: “It doesn’t matter what trades I make because I can always find a couple of biotech stocks to smoke.”
Regulators also allege he ran public campaigns to short certain drug stocks, predicting their key clinical trials would fail.
What Regulators Want
The FTC and the states want Shkreli to sell any pharmaceutical stocks he still owns. They also want a fine equal to his trading profits plus prejudgment interest, with no credit for losses.
Future violations would bring escalating penalties, including possible jail time. FTC Commissioner Mark Meador said Shkreli’s “repeated violations” justify “escalating consequences for future misconduct — including financial penalties and, if necessary, incarceration,” CNBC reported.
The commission voted 1-0 to approve the filing. Chairman Andrew Ferguson recused himself.
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The Daraprim Saga
The ban goes back to 2015. As CEO of Turing Pharmaceuticals, Shkreli raised the price of the antiparasitic drug Daraprim overnight to $750 per tablet from $17.50, per Reuters. The price hike earned him the “Pharma Bro” nickname.
Turing was his second drug company. Shkreli started it after the board of Retrophin Inc. pushed him out as CEO in 2014, CNBC reported. Retrophin has since rebranded as Travere Therapeutics Inc. (NASDAQ:TVTX).
After a trial without a jury, U.S. District Judge Denise Cote found Shkreli used “particularly heartless and coercive” tactics to keep generic rivals off the market. She banned him for life and ordered him to pay $64.6 million.
A federal appeals court upheld the ban in 2024, and the U.S. Supreme Court later declined to hear his challenge to the penalty.
Not the First Clash
In 2023, the FTC sought contempt after Shkreli failed to answer questions about Druglike Inc., a company he launched after leaving prison, CNBC reported. Shkreli argued at the time that Druglike was a software company and fell outside the ban.
“Today’s action should serve as notice that the FTC will not hesitate to enforce violations of court orders,” said Daniel Guarnera, director of the FTC’s Bureau of Competition.
Photo: sh99 / Shutterstock
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