FBI arrests scorned 'Pharma Bro,' Martin Shkreli, for securities fraud (+video)
Martin Shkreli was criticized online for drastically hiking the price of a drug commonly prescribed to AIDS patients upon taking the helm of Turing Pharmaceuticals. Now he has been arrested on charges of securities fraud relating to a previous venture.
The FBI has arrested the man who sparked outrage this year when his company bought a generic prescription drug used to treat infections and swiftly raised the price of the medicine to astronomical proportions.
Federal authorities took Martin Shkreli into custody in Manhattan Thursday morning after an investigation into securities fraud over two companies he used to run.
Mr. Shkreli is now the chief executive officer of Turing Pharmaceuticals and KaloBios Pharmaceuticals Inc. But, at one time, he was in charge of hedge fund MSMB Capital Management and biopharmaceutical company Retrophin Inc.
Retrophin was subpoenaed last January by federal prosecutors who were looking at funds managed by Shkreli before he was fired in 2014. Shkreli has repudiated the charges.
In August, Retrophin filed a $65-million federal lawsuit accusing Shkreli of abusing his power by shuffling the company’s funds to pay off investors at MSMB Capital Management and boost his own wealth.
Shkreli was arrested Thursday at a midtown apartment, from where he came out shepherded by police. The FBI confirmed his arrest. Shkreli will likely be charged for illegally using Retrophin assets to compensate debts after MSMB lost millions of dollars.
Since news of his arrest, shares of Shkreli’s new company, KaloBios, have fallen 53 percent to $11.03 in premarket trading.
Congress has also launched investigations into Shkreli's role in Turning Pharmaceuticals' controversial price hike of Daraprim, a drug used to treat an infection commonly diagnosed in AIDS patients. New York state also looked into possible breaches of antitrust laws.
Turing raised the price of the drug Daraprim from $13.50 to $750 for one pill, a move that sparked extensive online scorn and earned Shkreli the nickname, "Pharma Bro." The treatment had been used for 62 years, before Shkreli took charge of the privately-held start-up.
One doctor told a Senate committee last week the price of using Daraprim per patients, which sometimes include babies, went from $1,200 to more than $69,000.
This report contains material from Reuters.