FTC Seeks Contempt Against Martin Shkreli for Ban Violation
The FTC and seven states have asked a federal judge to hold Martin Shkreli in civil contempt, alleging he violated a lifetime ban from the pharmaceutical industry by trading shares and influencing biopharma stocks.
The Federal Trade Commission and seven states asked a federal judge on Tuesday to hold Martin Shkreli in civil contempt. They allege he flagrantly violated a 2022 lifetime ban from the pharmaceutical industry. The joint motion was filed in the U.S. District Court for the Southern District of New York. Regulators claim Shkreli has traded shares in at least 60 pharmaceutical companies since his release from prison in May 2022. The commission voted 1-0 to approve the filing, with Chairman Andrew Ferguson recused. Future violations could bring escalating penalties, including possible jail time.
Shkreli's History of Regulatory Violations
Martin Shkreli, the former hedge-fund manager known as 'Pharma Bro,' has a long record of legal troubles. He was convicted in 2017 on two counts of securities fraud and one count of conspiracy. His notoriety stems from a 2015 price hike of Daraprim, a drug used to treat a rare parasitic infection. As CEO of Turing Pharmaceuticals, Shkreli raised the price from $17.50 to $750 per tablet. This occurred during a mainstream debate over soaring drug costs.
After a trial, U.S. District Judge Denise Cote found Shkreli used heartless and coercive tactics to stifle generic competition. She banned him for life from the pharmaceutical industry in 2022 and ordered him to pay $64.6 million. The 2022 injunction bars him from directly or indirectly participating in the industry. This includes owning a stake in a drug company or trying to influence its management. A federal appeals court upheld the ban in 2024, and the U.S. Supreme Court declined to hear his challenge.
The FTC had previously sought contempt in 2023 over Shkreli's involvement with a company called Druglike Inc. Shkreli argued it was a software venture outside the ban's scope. FTC Commissioner Mark Meador stated that Shkreli's repeated violations justify escalating consequences. These include financial penalties and, if necessary, incarceration. Daniel Guarnera, director of the FTC’s Bureau of Competition, said the action serves as notice that the FTC will enforce court orders.
Regulatory Demands and Penalties
The regulators are demanding specific remedies. They want Shkreli to sell any pharmaceutical stocks he still owns. Authorities also seek a financial penalty equal to his trading profits plus prejudgment interest. No credit would be given for any losses incurred.
Shkreli has used online platforms like YouTube, X, and Reddit to share his views on drug company management. The alleged misconduct involves influencing biopharma stocks through these channels. Turing was Shkreli's second drug company, started after he was pushed out as CEO of Retrophin Inc. in 2014. That company has since rebranded as Travere Therapeutics Inc. The court will now rule on the contempt motion and determine the financial penalties Shkreli must pay.
