Word came about a half hour ago that everyone’s least favorite spokesman for the drug industry, Martin Shkreli, was arrested for securities fraud. His former company (Retrophin) has been accusing him of just that, claiming that he was illegally moving money around to cover losses in his hedge-fund activities, and it looks like Federal prosecutors have enough information to act on these suspicions.
Now, not everyone who gets hauled in for securities fraud has actually committed securities fraud. Over the years, the New York prosecutor’s office has gone through cycles of overreaching on that sort of charge. But given Shkreli’s loophole-seeking, the-rules-don’t-matter behavior in the past, I have no trouble believing the accusations. We’ll see how this plays out – Shkreli has called Retrophin’s accusations “completely false, untrue at best and defamatory at worst”, but that’s just what you’d expect him to say. Between Federal criminal charges and civil charges coming from the SEC, he’s entering a world where confident swagger will not work as well as he may have become accustomed to. He’s going to need not only his attitude – he’s going to need a really good lawyer, and he’s going to need to have some of the facts on his side – for once. I would be lying if I tried to pretend that this news doesn’t please me.
Update: as you could well expect, shares of Shkreli’s recently acquired Kalabios are down about 50% in premarket trading. By now, I would guess that almost everyone has lost money on that one: the folks who were short before the acquisition got squeezed out at ruinous prices, and anyone who bought in after the rise is now well in the red themselves. The only people that I’m sure are still good on the deal are, naturally, Martin Shkreli and his company. . .
Update 2: here’s a copy of the indictment, which covers Shkreli’s lawyer as well.