December 17, 2015
By Alex Keown, BioSpace.com Breaking News Staff
http://www.biospace.com/News/notorious-turing-ceo-martin-shkreli-arrested-for/403342?type=email&source=GP_121715
NEW YORK – Martin Shkreli, the pharmaceutical industry’s so-called “bad boy,” has been arrested on charges of securities fraud related to his tenure as chief executive officer of Retrophin Inc. (RTRX)
Shkreli, who became something of an industry pariah after increasing the price of a 65-year-old drug 5,000 percent, then lamenting the fact that he didn’t raise it even higher in order to increase profit, was arrested at his home this morning, Bloomberg reported. Shkreli is being charged with a misuse of company funds when he was CEO of that company. Prosecutors allege that Shkreli took company stock and used it to pay off personal debts. Additionally, Shkreli is charged with playing shell games with his former hedge fund, MSMB Capital Management, which lost millions of investor’s dollars, Bloomberg said.
In January, Shkreli came under investigation by U.S. prosecutors for possible securities violations and from the U.S. Securities and Exchange Commission for the distribution of stock without letting shareholders know. An internal probe conducted by Retrophin and filed with the Securities and Exchange Commission on Feb. 19 alleged Shkreli used corporate funds to pay off personal legal debts and was hiding company legal matters from public disclosure. Additionally, the probe said Shkreli used corporate funds to resolve legal matters with MSMB Capital Management, a hedge fund he managed, as well as disguised legal settlements as consulting agreements with Retrophin, both of which cost the company millions of dollars and a transfer of thousands of shares of stock
In August, Retrophin sued Shkreli for $65 million over his use of company funds while helming that company. In its lawsuit, Retrophin said Shkreli breached his duty of loyalty to the biopharmaceutical company and he engaged in self-dealing and also seeks disgorgement of money paid to him. Retrophin said Shkreli used company funds for personal use, enriched himself through false consulting contracts and referred to Shkreli as “the paradigm faithless servant” who “is not entitled to compensation or post-separation benefits.” Retrophin alleges Shkreli struck payoff agreement up to 10 MSMB investors who lost money when the hedge fund collapsed. Shkreli paid some investors through fake consulting agreements and others through unauthorized appropriations of stock and cash, the company alleged in its lawsuit.
Shkreli, who maintains a defiant presence on social media, said the lawsuit was without merit and said Retrophin still owes him millions of dollars. Shkreli defended himself in a post at Investorshub.com. He said the accusations noted in the Retrophin internal investigation are “false, untrue at best and defamatory at worst,” he said in his post.
“Every transaction I've ever made at Retrophin was done with outside counsel's blessing (I have the bills to prove it), board approval and made good corporate sense. I took Retrophin from an idea to a $500 million public company in three years—and I had a lot of help along the way," he said in his post.
In addition to Shkreli’s arrest, attorney Evan Greebel was also charged with conspiring with Shkreli.
After his ouster from Retrophin, Shkreli founded Turing Pharmaceuticals in February. In August, the company acquired Daraprim, a treatment for toxoplasmosis, for $55 million, then increased the price of the drug used by about 2,000 people in the United States by 5,000 percent. That move earned him endless amounts of public derision and prompted members of Congress to launch investigations into the high price of prescription drugs, as well as becoming the target of presidential candidates, including Donald Trump referring to Shkreli as a “spoiled brat.”
Most recently, Shkreli acquired a majority stake in KaloBios (KBIO) and became the CEO of that company. Since news broke of his arrest, shares of KaloBios plummeted in 50 percent in Thursday's pre-market session. It last traded at $11.75 before being halted at 6:50 a.m., Yahoo Finance reported this morning.
Brooklyn U.S. Attorney Robert Capers is scheduled to hold a press conference with officials from the Federal Bureau of Investigation and U.S. Securities and Exchange Commission at noon EST to discuss the charges.
By Alex Keown, BioSpace.com Breaking News Staff
http://www.biospace.com/News/notorious-turing-ceo-martin-shkreli-arrested-for/403342?type=email&source=GP_121715
NEW YORK – Martin Shkreli, the pharmaceutical industry’s so-called “bad boy,” has been arrested on charges of securities fraud related to his tenure as chief executive officer of Retrophin Inc. (RTRX)
Shkreli, who became something of an industry pariah after increasing the price of a 65-year-old drug 5,000 percent, then lamenting the fact that he didn’t raise it even higher in order to increase profit, was arrested at his home this morning, Bloomberg reported. Shkreli is being charged with a misuse of company funds when he was CEO of that company. Prosecutors allege that Shkreli took company stock and used it to pay off personal debts. Additionally, Shkreli is charged with playing shell games with his former hedge fund, MSMB Capital Management, which lost millions of investor’s dollars, Bloomberg said.
In January, Shkreli came under investigation by U.S. prosecutors for possible securities violations and from the U.S. Securities and Exchange Commission for the distribution of stock without letting shareholders know. An internal probe conducted by Retrophin and filed with the Securities and Exchange Commission on Feb. 19 alleged Shkreli used corporate funds to pay off personal legal debts and was hiding company legal matters from public disclosure. Additionally, the probe said Shkreli used corporate funds to resolve legal matters with MSMB Capital Management, a hedge fund he managed, as well as disguised legal settlements as consulting agreements with Retrophin, both of which cost the company millions of dollars and a transfer of thousands of shares of stock
In August, Retrophin sued Shkreli for $65 million over his use of company funds while helming that company. In its lawsuit, Retrophin said Shkreli breached his duty of loyalty to the biopharmaceutical company and he engaged in self-dealing and also seeks disgorgement of money paid to him. Retrophin said Shkreli used company funds for personal use, enriched himself through false consulting contracts and referred to Shkreli as “the paradigm faithless servant” who “is not entitled to compensation or post-separation benefits.” Retrophin alleges Shkreli struck payoff agreement up to 10 MSMB investors who lost money when the hedge fund collapsed. Shkreli paid some investors through fake consulting agreements and others through unauthorized appropriations of stock and cash, the company alleged in its lawsuit.
Shkreli, who maintains a defiant presence on social media, said the lawsuit was without merit and said Retrophin still owes him millions of dollars. Shkreli defended himself in a post at Investorshub.com. He said the accusations noted in the Retrophin internal investigation are “false, untrue at best and defamatory at worst,” he said in his post.
“Every transaction I've ever made at Retrophin was done with outside counsel's blessing (I have the bills to prove it), board approval and made good corporate sense. I took Retrophin from an idea to a $500 million public company in three years—and I had a lot of help along the way," he said in his post.
In addition to Shkreli’s arrest, attorney Evan Greebel was also charged with conspiring with Shkreli.
After his ouster from Retrophin, Shkreli founded Turing Pharmaceuticals in February. In August, the company acquired Daraprim, a treatment for toxoplasmosis, for $55 million, then increased the price of the drug used by about 2,000 people in the United States by 5,000 percent. That move earned him endless amounts of public derision and prompted members of Congress to launch investigations into the high price of prescription drugs, as well as becoming the target of presidential candidates, including Donald Trump referring to Shkreli as a “spoiled brat.”
Most recently, Shkreli acquired a majority stake in KaloBios (KBIO) and became the CEO of that company. Since news broke of his arrest, shares of KaloBios plummeted in 50 percent in Thursday's pre-market session. It last traded at $11.75 before being halted at 6:50 a.m., Yahoo Finance reported this morning.
Brooklyn U.S. Attorney Robert Capers is scheduled to hold a press conference with officials from the Federal Bureau of Investigation and U.S. Securities and Exchange Commission at noon EST to discuss the charges.