“Conscience is the inner voice that warns us somebody may be looking.” – H.L. Mencken
Martin Shkreli earned the nation’s contempt and the nickname “Pharma Bro” by jacking up the price of a lifesaving drug by more than 5,000%. He went to prison for an unrelated fraud scheme and was banned from the pharmaceutical industry for life.
So what’s the former hedge fund manager do after four years in the pen? He goes right back to being Pharma Bro.
On Tuesday, the Federal Trade Commission and seven states asked a federal judge to hold him in civil contempt, alleging that he has flagrantly violated his court-ordered industry ban.
Regulators say he’s bought and sold shares in at least 60 pharmaceutical companies, analyzed drug trials, promoted his pharma trades to followers and tried to influence companies in which he had stakes.
All of the positions regulators complained about in their motion memorandum were short sales, or bets against a company’s successes.
And he wouldn’t be Pharma Bro if he didn’t shamelessly livestream his moves.
“I’m showing you how to trade and invest in biotech,” he told viewers during one episode regulators cited.
In one video he even acknowledged the obvious: “I know feds are watching.”
Might as well face it, he’s addicted to pharma.
Shkreli, 43, earned his place in the Business Blunders Hall of Shame after becoming perhaps the most reviled pharmaceutical parasite in America.
His company, then known as Turing Pharmaceuticals, bought the rights to Daraprim, a decades-old drug used to treat a potentially deadly parasitic infection, and jacked the price from $13.50 a pill to $750.
In 2016, he was called before Congress for this atrocity and famously smirked his way through the hearing while he invoked the Fifth Amendment.
In 2018, he was sentenced to seven years in prison.
“For years, Shkreli told lie after lie in order to steal his investors’ money, manipulate the stock market and enrich himself,” U.S. Attorney Richard Donoghue said at the time.
In February 2022, a federal court ordered him to pay $64.6 million and barred him from participating in the pharmaceutical industry.
Then in May 2022, Pharma Bro somehow earned an early release for good behavior. And within a couple months, he boldly announced a new venture called Druglike, a Web3 platform designed to help discover drugs.
Druglike was not a drug company. It just had “drug” in its name and helped people discover drugs. Get it?
Regulators, however, are more focused on his trash-talking and his stock trading.
“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,” regulators said.
One company laid off a third of its employees and another warned that there was “substantial doubt” about its ability to stay in business following Shkreli’s short attacks, according to the memorandum. But there’s an interesting wrinkle: Sometimes Pharma Bro was right.
Yes, he was trash-talking companies he had shorted. No, their stocks didn’t crater just because Martin Shkreli said mean things about them.
But should he have been trading them at all given his lifetime ban? That’s the question.
Regulators are now asking the court to order Shkreli to sell his pharmaceutical holdings and surrender his profits, plus interest. They also want escalating sanctions for future violations that could eventually send him back to the federal farm.
Perhaps we’ve been spelling Pharma Bro incorrectly all these years.
Maybe it’s Farma Bro.
