FTC asks court to hold Martin Shkreli in contempt over lifetime pharma ban
The FTC and seven states allege Shkreli traded drug stocks and promoted positions online despite a 2022 lifetime industry ban.
By James Whitfield · Staff Writer
2 min read
The Federal Trade Commission and seven states have asked a federal judge to hold Martin Shkreli in civil contempt over his Martin Shkreli lifetime pharma ban. The filing alleges that he traded drug-company shares and discussed companies online after a 2022 order barred him from participating in the pharmaceutical industry; the court has not yet ruled.
The request was filed Oct. 13 in the U.S. District Court for the Southern District of New York by the FTC and attorneys general from New York, California, Illinois, North Carolina, Ohio, Pennsylvania and Virginia. The regulators want an order requiring Shkreli to explain why he should not be found in contempt and sanctions intended to make him comply with the injunction.
What does Martin Shkreli's lifetime pharma ban prohibit?
According to the FTC's contempt filing announcement, the 2022 injunction bars Shkreli from directly or indirectly taking part in the pharmaceutical industry. It specifically prohibits him from acquiring or holding an ownership interest in a pharmaceutical company and from acting to influence or control such a company's management or business.
The FTC and states allege that Shkreli has publicly traded stock in at least 60 pharmaceutical companies since leaving prison in May 2022. They also allege he broadcast opinions about the business and management of numerous pharmaceutical companies through YouTube, X and Reddit.
The regulators say Shkreli livestreamed trades in drug-company shares and used some broadcasts to promote short positions in particular companies based on his predictions that key clinical trials would fail. A short position is a trade that seeks to profit if a stock price falls. Those assertions are allegations in the contempt motion, rather than findings by the court.
What penalties are regulators seeking?
The FTC and the states are asking the court to require Shkreli to sell any pharmaceutical-company shares he owns. They also seek a fine equal to his profits from pharmaceutical-stock trading, plus prejudgment interest, without allowing losses to reduce the amount.
The filing further asks for defined and increasing consequences for later violations, including financial penalties and possible incarceration. The commission authorized the contempt action by a 1-0 vote, according to the FTC; Chairman Andrew N. Ferguson was recused.
The lifetime ban arose from a separate antitrust case. The FTC says the Southern District of New York found in 2022 that Shkreli organized an illegal scheme to preserve a monopoly involving Daraprim, a treatment for toxoplasmosis, by blocking generic competition. According to the agency, the court found the conduct protected an increase in the drug's price from $17.50 to $750 a tablet, imposed the industry ban and ordered Shkreli to disgorge more than $64 million.
This story draws on original reporting from Ars Technica.