FTC claims Shkreli is in contempt after defying lifetime pharma ban

State and federal regulators say the convicted entrepreneur's repeated stock trades and online investment advice violate a judge’s antitrust order preventing him from doing business in the industry.MANHATTAN (CN) — The Federal Trade Commission and seven states on Tuesday asked a New York federal judge to hold disgraced businessman Martin Shkreli in contempt over stock trades they assert violate his court-ordered permanent ban from the pharmaceutical industry.In a pair of court filings Tuesday, the FTC and its state co-plaintiffs claim Shkreli, the biotech entrepreneur infamous for jacking up the price of a lifesaving drug used to treat HIV, has been violating a 2022 injunction by publicly trading pharmaceutical industry stocks and broadcasting his opinions about such companies since his release from prison in May 2022.Shkreli, 43, was convicted for securities fraud charges unrelated to the HIV drug Daraprim in August 2017. In January 2022, he was found liable in a civil case in Manhattan federal court for violating federal and state antitrust laws by acquiring Daraprim, raising the price per pill from $17.50 to $750, and constricting competition from generic drug manufacturers that severely limited supply and put patients at risk.In her ruling, Senior U.S. District Judge Denise Cote banned Shkreli for life from participating in the pharmaceutical industry in any way.On Tuesday, the FTC and the coalition of states attorneys general urged Cote, a Bill Clinton appointee, to hold Shkreli in contempt of the court for openly trading pharmaceutical stocks, publicly discussing the industry and encouraging his social media followers to invest based on his recommendations.They say Shkreli has publicly gloated about taking profitable short positions — bets that a stock will lose value — on numerous small pharmaceutical companies, which are especially vulnerable to short selling. Their stock price can swing dramatically upon certain events, such as FDA approval or the success or failure of a clinical drug study.Regulators are also asking Cote to institute penalties, including forcing Shkreli to forfeit all trading profits and sell all his pharmaceutical stock.“Martin Shkreli has flagrantly and repeatedly violated this court’s permanent injunction,” the regulators wrote. “For his brazen violations of this court’s permanent injunction, Shkreli should be held in civil contempt and face sanctions to purge his current contempt and to coerce his future compliance."They are also calling for divestment of his ownership in any pharmaceutical company, a fine in the amount of profits on his trades, and additional fines or jail time for future violations.The FTC and the states point to Shkreli’s activity on social media platforms — including frequent livestreams and posts on YouTube, X and Reddit — as “likely the tip of the iceberg” of his trading. They note Shkreli himself has publicly intimated he does most of his trading off social media.“I have some other accounts that I’[d] show you, but, like, I know feds are watching, so f[*]ck that,” Shkreli is quoted as saying in the court filing.The regulators are also seeking a court order directing Shkreli — along with his sister, Leonora Izerne, and significant other, Chelsea Voss — to refrain from destroying any potential evidence related to his past, present or future permanent injunction violations, including public online posts.New York Attorney General Letitia James said Tuesday, “Shkreli’s market manipulation and monopolistic tactics put investors and the public at risk.”“A court-ordered lifetime ban isn’t a suggestion,” she said in a statement. “Martin Shkreli has been livestreaming his pharmaceutical company trades for the world to see, in violation of the law.”James is joined as co-plaintiff by the attorneys general of California, Illinois, North Carolina, Ohio, Pennsylvania and Virginia.Representatives for Shkreli did not immediately respond to a request for comment.Shkreli resigned as chief executive of Turing Pharmaceuticals — later Vyera — in 2015, a day after he was arrested on securities fraud charges.A Brooklyn jury convicted him in August 2017 on three of eight criminal counts for looting revenue from his drug company Retrophin to compensate investors in his failing hedge funds — MSMB Healthcare and MSMB Capital.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads