Retrophin Booted CEO For Multiple Stock Violations: Report
Published: Oct 06, 2014
October 3, 2014
By Riley McDermid, BioSpace.com Breaking News Staff
The saga of ousted drug manufacturer Retrophin, Inc.'s chief executive, Martin Shkreli, got a juicy new chapter Friday, when Bloomberg reported he had been fired for violating multiple stock-trading irregularities and other violations of securities rules.
Retrophin was tight-lipped on Wednesday about why Shkreli was parting ways with the company, saying only that they wished him well.
But people familiar with the company have since told Bloomberg that he was unceremoniously sacked after granting Retrophin stock to “certain recipients in the absence of a shareholder-approved distribution plan, failures to disclose stock grants, and grants of stock above limits imposed by the plan that was eventually put in place.”
The news service also disclosed the Shkreli, who is a founder and managing partner of hedge fund MSMB Capital Management, has been involved in a criminal investigation into harassing a former employee. In a January 2014 affidavit for the case, the former employee, Timothy Pierotti, quoted from a letter sent to his wife by Shkreli, in which the then-CEO said: “I hope to see you and your four children homeless and will do whatever I can to assure this.”
As a former short seller trader, Shkreli was likely well aware of what or was not strictly legal when dealing with company stock. The violations will now likely catch the eye of regulators with the U.S. Securities and Exchange Commission, who levies heavy fines and penalties on companies found to be in violation of securities laws.
Retrophin appears to be trying to get ahead of any impending investigation, telling Bloomberg it will soon be bringing the firm “into Nasdaq compliance” and that any infractions were “not material” in financial terms.
Stephen Aselage, Retrophin’s chief operating officer, is currently the company’s interim CEO until the board chooses a long-term replacement.
The company's shares were up 4 percent in extended trading after Wednesday announcement but were gyrating Friday trading on the news of possible securities violations.
Retrophin sells metabolism treatment Chenodal and hypertension drug Vecamyl and has been closely watched for its pipeline of drugs treating rage disorders, schizophrenia and infantile spasms.
As for Shkreli, he appeared to be sanguine about the move on Wednesday, quickly tweeting “Rather upset at my inane BOD who was overly focused on irrelevant innuendo but also now can pursue a NewCo without them. So net-net excited. — Martin Shkreli (@MartinShkreli) September 30, 2014”
He has not issued a formal statement since.