HARRISBURG, PA — Federal and state regulators are seeking financial penalties and potential incarceration for Martin Shkreli, alleging that the former pharmaceutical executive violated a lifetime industry ban by trading shares of at least 60 drug companies and publicly attempting to influence their businesses.
Pennsylvania Attorney General Dave Sunday joined the Federal Trade Commission and six other states in asking a federal judge to hold Shkreli in civil contempt of a 2022 injunction that barred him from participating in the pharmaceutical industry.
The coalition alleges that Shkreli violated the order after his release from prison in May 2022 by buying and selling pharmaceutical stocks, livestreaming investment activity and publicly commenting on company management and operations.
The filing seeks an order requiring Shkreli to explain why he should not be held in contempt, along with sanctions intended to enforce the existing restrictions.
The dispute stems from an antitrust case involving Daraprim, a treatment for toxoplasmosis, a potentially fatal parasitic infection.
Pennsylvania joined the FTC and six other states in an amended complaint filed in April 2020 against Shkreli, another executive and companies they founded, including Vyera Pharmaceuticals LLC and Phoenixus AG.
Following a December 2021 trial, the U.S. District Court for the Southern District of New York ruled in February 2022 that Shkreli had organized an unlawful scheme to preserve a monopoly over Daraprim and prevent lower-cost generic competition.
The court found that the anticompetitive conduct protected the defendants’ ability to increase the medication’s price from $17.50 to $750 per tablet, an increase of more than 4,100%.
The ruling imposed a lifetime pharmaceutical industry ban and ordered Shkreli to disgorge more than $64 million.
Under the injunction, Shkreli is prohibited from directly or indirectly participating in the pharmaceutical industry, including acquiring ownership interests in pharmaceutical companies or taking actions intended to influence their management or business activities.
Regulators now allege that his subsequent trading and public commentary violated both restrictions.
According to the contempt motion, Shkreli publicly traded shares of at least 60 pharmaceutical companies and discussed those investments through livestreams and posts on YouTube, X, and Reddit.
In one livestream cited by regulators, Shkreli told viewers, “I’m showing you how to trade and invest in biotech.”
The coalition also alleges that Shkreli used online broadcasts to encourage short-selling campaigns against pharmaceutical companies whose clinical trials he predicted would fail.
Those activities, regulators contend, amounted to prohibited participation in the industry rather than passive public commentary.
“A court-ordered industry ban is not a suggestion, it is a legal obligation,” Sunday said.
The requested sanctions would require Shkreli to divest any pharmaceutical company shares he currently owns and surrender profits from pharmaceutical stock trading, plus prejudgment interest.
Regulators are seeking a financial penalty calculated without allowing trading losses to offset profits, potentially increasing the amount Shkreli would owe.
The coalition also wants the court to establish escalating consequences for future violations, including additional financial penalties and possible incarceration.
The contempt allegations remain subject to judicial review. The filing requests enforcement of the existing injunction rather than a new determination of the underlying antitrust violations.
All suspects, arrestees, and defendants are presumed innocent until proven guilty in a court of law
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