The FTC and seven states allege Martin Shkreli violated a lifetime ban on pharmaceutical industry participation by trading stocks and commenting on companies since his 2022 release.
The Federal Trade Commission (FTC) and seven US states have filed a motion asking a federal judge to hold Martin Shkreli in civil contempt. The regulators allege that Shkreli repeatedly violated a lifetime ban on participating in the pharmaceutical industry, which was imposed following his release from prison in May 2022.
In a motion filed on Tuesday in the US District Court for the Southern District of New York, the FTC and its state co-plaintiffs claim that Shkreli has traded stocks in at least 60 pharmaceutical companies. The filing states that he has also publicly commented on their businesses through livestreams and posts on YouTube, X, and Reddit.
The conditions of Shkreli’s release prohibit him from directly or indirectly participating in the pharmaceutical industry. This includes owning stakes in pharmaceutical companies or influencing their business decisions. According to the FTC, Shkreli publicized these activities during livestreams. In one instance, he told viewers: "I’m showing you how to trade and invest in biotech," according to the FTC. In another, he allegedly described his approach as a "magic trick," saying: "It doesn’t matter what trades I make because I can always find a couple of biotech stocks to smoke."
The FTC further alleges that Shkreli used his livestreams to organize public campaigns to short pharmaceutical stocks based on predictions that companies’ clinical trials would fail.
The lifetime ban stems from a 2022 ruling by US District Judge Denise Cote, who found that Shkreli organized an anticompetitive scheme to block generic competition for Daraprim, a drug used to treat toxoplasmosis. The scheme protected a price increase from $17.50 to $750 per tablet. The court ordered Shkreli to disgorge more than $64 million and barred him from the pharmaceutical industry for life. The US Court of Appeals for the Second Circuit affirmed this judgment in January 2024.
Separately, Shkreli was sentenced to seven years in prison in 2018 after being found guilty of securities fraud and conspiracy. He was released early in May 2022.
The FTC and the attorneys general of New York, California, Ohio, Pennsylvania, Illinois, North Carolina, and Virginia are seeking sanctions to purge Shkreli’s current contempt and coerce future compliance. The filing requests a complete accounting of his pharmaceutical company stock trades, divestment of any ownership in pharmaceutical companies, and a monetary fine equal to his profits from the alleged violations, plus prejudgment interest.
The regulators also ask for clear and escalating consequences for any future violations, including additional fines and incarceration. "Shkreli should be held in civil contempt and face sanctions to purge his current contempt and to coerce his future compliance," the FTC’s court filing said.
Daniel Guarnera, director of the FTC’s Bureau of Competition, stated that the action serves as a warning. "Today’s action should serve as notice that the FTC will not hesitate to enforce violations of court orders," Guarnera said. He added that "Defendants must fulfill their obligations" when a court issues an order.
New York Attorney General Letitia James emphasized the seriousness of the alleged violations. "A court-ordered lifetime ban isn’t a suggestion. Martin Shkreli has been livestreaming his pharmaceutical company trades for the world to see, in violation of the law," James said. She noted that Shkreli’s tactics "put investors and the public at risk."
The FTC voted 1-0 to authorize the action, with Chairman Andrew Ferguson recusing himself. The Guardian has reached out to Shkreli for comment.
This case highlights the ongoing enforcement efforts by US regulators to ensure compliance with court orders in antitrust and consumer protection cases. The allegations suggest that Shkreli has continued to engage in activities that the courts deemed harmful to competition and public health, prompting regulators to seek stricter penalties to prevent further violations.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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