Since his release from prison in 2022, Martin Shkreli has traded stocks and publicly opined on news events, damaging reputations and sinking share prices for small biotechs including Capricor and Cassava, the FTC alleges.
Martin Shkreli, the scorned “pharma bro” who drew the ire of patients for his actions as a pharmaceutical company executive, has come under the scrutiny of the Federal Trade Commission for allegedly violating his lifetime ban from the industry.
The FTC asked a judge to hold Shkreli in contempt, presenting evidence that he has “flagrantly and repeatedly” violated the court order that has been in place since 2022, according to a Tuesday press release. The disgraced executive has been trading in pharma stocks and “broadcasting his opinions about the business and management of many pharmaceutical industry companies,” according to the complaint.
Indeed, Shkreli recently weighed in on the saga of Capricor Therapeutics, recommending that CEO Linda Marbán and a researcher receive prison time.
“Having been myself, I am loathe to recommend prison. In this case, I’m making sure you’re both going,” Shkreli wrote in a July 27 post on X captured by BioSpace. “Playing with patient data is a line you cannot cross. In my worst hour I’d never.”
‘Egregious, deliberate, repetitive’
In the complaint, the FTC recapped the actions that led to the lifetime ban. Shkreli was originally found guilty of securities fraud in 2018 and sentenced to seven years in prison. In a separate case brought by the FTC in 2020, a court in 2022 found that Shkreli, in his capacity as executive of companies Vyera Pharmaceuticals and Phoenixus, and his co-defendants executed an anticompetitive scheme to prevent the entry of low-cost generics to the market.
The defendants were found to have jacked up the price of Daraprim, a drug used to treat a potentially deadly parasitic infection called toxoplasmosis, from $17.50 to $750 per pill.
Shkreli was found guilty of organizing an illegal scheme to perpetuate a monopoly for the medication. He was banned from the pharma industry for life due to his “egregious, deliberate, repetitive, long-running and ultimately dangerous illegal conduct,” according to the complaint. Shkreli was also fined over $64 million.
The ban specifically stated that Shkreli was not to “directly or indirectly” participate in the industry. He was also not to own any stocks of relevant companies or take any direct or indirect action to influence or control the management or business of a pharma company.
Martin Shkreli testifying before the House Committee on Oversight and Government Reform in 2016.
House Committee on Oversight and Government Reform, Wikimedia Commons
Nevertheless, since his early release in May 2022, Shkreli “has publicized his order violations” via posts on YouTube, X and Reddit, the FTC said.
“The motion alleges that, while livestreaming his trades in pharmaceutical industry stocks, Shkreli told his viewers ‘I’m showing you how to trade and invest in biotech,’” the FTC wrote.
Shkreli also showed viewers how to short a stock, which is when traders bet that a stock will decline rather than perform well, according to the FTC.
The complaint details his efforts to short Cassava Sciences’ stock in 2024. The company is developing the Alzheimer’s disease drug simufilam. Shkreli dedicated hours of livestreams to the company, declaring that “the odds that this drug works is, like . . . 1%,” according to the complaint.
“On November 24, 2024, he declared that if Cassava’s trial was successful, he would shave his head, delete his social media accounts, change his name to Martina, move to Haiti, and ‘retire from business completely,’” the FTC said.
In total, Shkreli has traded in dozens of pharma and biotech stocks, including Amgen, AstraZeneca, Novo, Intellia Therapeutics, Viking Therapeutics, Nuvation Bio, Neumora Therapeutics, Anavex Life Sciences and many more, according to the complaint.
The FTC also provided a much longer list of companies that Shkreli has spoken about or traded in during his livestreams, including Eli Lilly, Sarepta Therapeutics, Biogen and uniQure.
Moving the markets
Throughout the complaint, the FTC included screengrabs of Shkreli’s social media commentary. The activity continued into this year, when Shkreli issued a new “trading challenge” with an account that had a balance of $10 million. This round included trades in Pfizer, Moderna and others.
“Shkreli continues to dedicate much of his now-frequent livestreams to discussing pharmaceutical company stocks and their relative merits,” the FTC complaint said.
Shkreli ultimately lost a short he placed against Capricor, writing this year that he “lost millions” and, in a profane and misogynistic X post that was included in the FTC complaint, threatened to send Marbán to jail. Nevertheless, his public statements urging his followers to short the stock at one point sent the biotech’s shares down 17%, according to the FTC.
“Shkreli’s ability to move the market with his spoken and written assaults has real consequences for the small biotech companies that are the subject of his short attacks,” the FTC explained in the complaint. “With no products generating revenue, a clinical-stage biotech company relies entirely on investors to sustain them until they can get their product approved and on the market. When their stock price drops and their reputation is under attack, the company may be unable to raise the needed funds through the typical path of additional public stock offerings.”
Cassava, for instance, “facing such a cash crunch in the wake of Shkreli’s successful short attacks,” was forced to lay off staff, the agency said.
The FTC has asked the court to hold Shkreli in contempt, force him to divest his shares and issue a fine in the amount he has profited. Shkreli should also face escalating penalties for continued violations of the lifetime ban, the agency said.
