The Federal Trade Commission and seven states asked a federal judge Tuesday to hold Martin Shkreli in civil contempt, alleging he repeatedly violated a lifetime ban that bars him from participating in the pharmaceutical industry.
The FTC and the attorneys general of New York, California, Ohio, Pennsylvania, Illinois, North Carolina and Virginia filed the motion and brief in the U.S. District Court for the Southern District of New York. Regulators allege Shkreli has traded pharmaceutical stocks and publicly tried to influence drug companies since his release from prison in May 2022.
Regulators Allege Stock Trading And Online Campaigns
The filing alleges Shkreli traded shares of at least 60 pharmaceutical companies and used YouTube, X and Reddit to discuss their businesses and management. The 2022 injunction bars him from acquiring or holding an ownership interest in a pharmaceutical company or taking action to influence or control one.
Regulators cited livestreams in which Shkreli discussed biotech trading. In one, according to the FTC, Shkreli told viewers, “I’m showing you how to trade and invest in biotech.” The filing also accuses him of using livestreams to campaign against certain pharmaceutical stocks while predicting that key clinical trials would fail.
Lifetime Ban Followed Daraprim Antitrust Case
U.S. District Judge Denise Cote found in 2022 that Shkreli organized an anticompetitive scheme that blocked generic competition for Daraprim, a drug used to treat toxoplasmosis.
The court found that the scheme protected a price increase from $17.50 to $750 per tablet.
Cote ordered Shkreli to disgorge more than $64 million and barred him from the pharmaceutical industry for life.
The U.S. Court of Appeals for the Second Circuit affirmed the judgment in January 2024.
Regulators previously sought a contempt finding in January 2023 after alleging Shkreli failed to provide compliance reports, documents and an interview required by the injunction. Tuesday’s motion instead alleges that Shkreli directly violated the industry ban through stock ownership and efforts to influence pharmaceutical companies.
FTC Seeks Profits, Divestment And Escalating Sanctions
The new filing asks the court to order Shkreli to sell any pharmaceutical stocks he owns and pay a fine equal to his profits from pharmaceutical-stock trading, plus prejudgment interest. Regulators also ask the court to establish escalating consequences for future violations, including financial penalties and potential incarceration.
“Today’s action should serve as notice that the FTC will not hesitate to enforce violations of court orders,” Daniel Guarnera, director of the FTC’s Bureau of Competition, said in the agency’s October 13 release.
The FTC voted 1-0 to authorize the action. FTC Chairman Andrew Ferguson recused himself, and Commissioner Mark Meador issued a separate statement. The FTC lists the case as pending.
