FTC Seeks To Hold Martin Shkreli In Contempt For Allegedly Violating Lifetime Pharmaceutical Industry Ban

Federal regulators are seeking to hold Martin Shkreli in contempt of court, accusing the controversial former pharmaceutical executive of repeatedly violating a lifetime ban on participating in the drug industry.

The Federal Trade Commission, joined by seven states, filed a motion Tuesday alleging that Shkreli has continued trading pharmaceutical stocks and publicly commenting on drug companies despite a 2022 federal court injunction prohibiting him from involvement in the industry.

According to the FTC’s filing, Shkreli has publicly traded shares in at least 60 pharmaceutical companies since leaving prison in May 2022. Regulators also contend that his social media activity, including livestreams discussing biotech investments and individual companies, amounts to additional violations of the court order.

The dispute stems from Shkreli’s involvement with Vyera Pharmaceuticals, formerly Turing Pharmaceuticals, which acquired the rights to Daraprim, a medication used to treat toxoplasmosis, and subsequently increased its price from $17.50 to $750 per tablet. In 2022, a federal judge in Manhattan found that Shkreli had orchestrated an anticompetitive scheme designed to prevent generic competitors from entering the market, allowing the company to maintain its monopoly pricing. The ruling imposed a lifetime pharmaceutical industry ban and ordered Shkreli to pay more than $64 million.

The injunction prohibited Shkreli from directly or indirectly participating in the pharmaceutical industry, including acquiring ownership interests in pharmaceutical companies or attempting to influence their management or business operations.

Regulators now argue that his stock trading and public commentary crossed those boundaries. In their filing, the FTC and state attorneys general pointed to Shkreli’s activity on YouTube, X and Reddit, where he has frequently discussed pharmaceutical companies and investment opportunities.

During one livestream, Shkreli allegedly told viewers, “I’m showing you how to trade and invest in biotech.”

In another, he reportedly boasted about his ability to identify pharmaceutical stocks that would decline, saying, “It doesn’t matter what trades I make because I can always find a couple of biotech stocks to smoke.”

The government further alleges that Shkreli used his online broadcasts to promote bearish positions against pharmaceutical companies, including publicly predicting that certain clinical trials would fail. The FTC maintains that these activities violate restrictions intended to prevent Shkreli from exercising influence over pharmaceutical businesses, even without formally serving as an executive or director.

Daniel Guarnera, director of the FTC’s Bureau of Competition, said the agency intends to enforce the original judgment, emphasizing that defendants are obligated to comply with court orders regardless of whether they result from settlements or trials. The regulators are asking the court to require Shkreli to explain why he should not be held in civil contempt and to impose sanctions designed to secure his compliance.

Those proposed penalties include forcing Shkreli to sell any pharmaceutical shares he currently owns and surrender profits earned from pharmaceutical stock trading, plus interest. Importantly, the government wants those profits calculated without allowing Shkreli to offset gains against losses from other trades.

The filing also seeks escalating penalties for future violations, potentially including additional financial sanctions and incarceration. The case raises an unusual question about the reach of a lifetime industry ban, particularly when applied to publicly traded securities and online investment commentary. The FTC’s position is that Shkreli’s conduct falls within the broad language of the existing injunction, rather than merely representing ordinary market participation.

For now, the allegations remain before the court. Shkreli has not been found in contempt in this latest proceeding, and a judge will determine whether his trading and public activities violated the 2022 order.

If the government prevails, the consequences could extend well beyond the profits from his pharmaceutical stock trades, potentially exposing Shkreli to additional sanctions and renewed incarceration for failing to comply with the injunction.