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Martin Shkreli Arrested

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.

50 comments on “Martin Shkreli Arrested”

  1. Jose says:

    Guilty or not, it simply couldn’t happen to a nicer guy!

  2. Rollo Tomassi says:

    Typical Obama Administration overreach. They’re always trying to penalize people who make a money. By the time this is over, he won’t be president anymore and the SEC lawyers are going to need lawyers of their own.

    1. anonymous says:

      Out of curiosity just how much involvement do you imagine Obama has on a case like this? There’s been rumors and accusations made by people other than the government for some time. Shkreli seems like the sort to play fast with the rules. Unfortunately the most likely outcome is that he’ll plea down when all is said and done. He’ll pay a fine that’s not enough to really punish him and he’ll continue his rent-seeking self-aggrandizement.

    2. hexagons_everywhere says:

      You are the reason those ‘thanks Obama’ jokes are funny. Keep it up.

  3. Anon says:

    Poor Mr. Wu-Tang!

  4. Anonymous Researcher snaw says:

    ‘O frabjous day! Callooh! Callay!’ He chortled in his joy

  5. HT says:

    Santa came early this year! Merry X’mas!

  6. Mike B says:

    Hopefully the Feds will confiscate the Wu-Tang album.

  7. anon says:

    I have just spilled my last 25mg starting material. I am not feeling bad anymore. Thanks for the good news Derek.

    1. HK says:

      Keep on truckin’, friend

  8. Ahoo says:

    Tis the season to be jolly.

  9. Sara says:

    His lawyer was arrested too!

    1. milkshake says:

      That lawyers arrest must be some kind of coincidence, totally unforeseen and without anyone’s fault. (In the insurance business, it is called The Act of God)

    2. fajensen says:

      Heh. Now I need both a Cognac and a Cigar.
      Maybe even an extra log in the fireplace too.

  10. PorkPieHat says:

    Poor Tu****ing. Must be some tough guilt by association going on when your CEO gets arrested (leave alone the perception of anyone having anything to do with Tu***ing as a result of their CEO’s behavior past, present (and future?). Gotta agree with Jose…couldn’t happen to a nicer guy! Unfortunately, he’ll find a way to weasel out of it. Weasel.

    From Encyclopaedia Britannica – Weasel: “any of various small carnivores . . . Weasels are bold and aggressive predators. . . Because they cannot accumulate fat and thus must eat frequently, weasels often kill more prey than they can immediately consume. . . This explains the carnage often seen after they discover captive domestic fowl.”

    Yeah…he’s a weasel.

    1. honey badger says:

      Close, but more accurately Shkreli is just another honey badger, or rather an aspiring honey badger. The industry is full of them. Honey badgers just take what they want and they don’t care:

      Thank you Santa (and the FBI), for knowing who’s been naughty and nice…

      1. PorkPieHat says:

        @honeybadger: Dude, thanks for the link. The guy narrating was a hoot! Martin Shkreli may be a mix of both honeybadger and weasel.

  11. metals wrangler says:

    Couldn’t happen to a more deserving individual. Sounds like T***ring isn’t the only thing he gamed.
    Sorry about your starting material, anon.

  12. Anon says:

    There can be no better definition of ‘shadenfreude’ than what I’m feeling right now. 🙂

  13. Curt F. says:

    I’m generally a big fan of the of the jury trial system, but this thread makes me much less sure. I’m 100% sure I would never want to hang out with M. Shkreli — he does sound like an unfriendly guy. I’m also 99% sure that I would never want to invest money with him.

    But I have no idea if he is actually guilty of securities fraud. Does anyone else here really have an informed opinion on the topic? Maybe one or two folks do, but I doubt the entirety of the commentariat does. Instead its all just smug schaudenfreudianism.

    If I’m ever charged with a crime, I hope that none of you folks are chosen to be on my jury.

    1. Algirdas says:

      In addition to Pipeline, the other blog that I follow regularly is Popehat law blog. There, you can find pretty much endless chronicle of prosecutorial overreach (and as an aside, description of the “grand jury” farce was an eye opener for me). Shkreli is an asshole, and if he’s broken laws he should be punished severely. But being arrested by feds says very little about whether a person is actually guilty of the conduct being incriminated.

    2. Hap says:

      From this article: ( (about the SEC using internal proceedings to curtail defendants’ rights and improve their rates of success). : “Not surprisingly, the SEC has a much higher success rate when it proceeds administratively: between October 2010 and March 2015, the SEC won 90% of cases brought before ALJs, and only 69% of cases heard by federal district court judges.” It doesn’t say what percentage of people charged end up getting convicted (which has to be less), but that percentage implies that even on neutral ground, the SEC isn’t just tossing up bricks. Since he was already being sued over similar machinations, the SEC prosecution isn’t likely just schadenfreude for making pharma look bad.

      The jury system’s sort of like peer review: what’s better? (The jury system is a replacement for having judges do it all, probably because they are rewarded for convictions and able to be biased.) I imagine finding someone with brain activity and no prior opinion of Shkreli may be difficult, though.

    3. RM says:

      For me, I’m not all that skeptical about the charges because Shkreli has been exhibiting what appears to me to be extremely narcissistic, self-centered behavior. That’s *exactly* the sort of person who might think that securities regulations only apply to suckers, or at the very least would think they’re more clever than the SEC and can manufacture loopholes. That is, to a person like Martin Shkreli, securities regulations are likely just another opportunity to demonstrate just how clever he is, the rest of the world be damned.

      I, of course, don’t have any of the information that the FBI/SEC has in making it’s decisions, so it may very well be that he hasn’t technically broken any laws and they’re being overzealous. If that’s the case, then I agree he shouldn’t be punished. But as a non-jury member of the general public, it strikes me as unlikely.

    4. matt says:

      Read the indictment. Perhaps it wasn’t up when you commented. I consider myself reasonably skilled in finding multiple possible explanations for a set of facts, having become accustomed to the ordinary science-career’s smackdown on favorite theories and damn good stories which just happen to not fit reality. But in this case, I don’t see much wiggle room.

      But, having dealt with people like Shkreli and his lawyer, I have no doubt he will have further lies to try to patch things up. Such people always do, from a lifetime of trying to bury others with snow plows and snow blowers piling on heaps of their shifty statements.

    5. loupgarous says:

      The Obama administration, arguably, has abused the Securities and Exchange Commission to get back at people who didn’t actually do anything wrong, as when SEC investigated Standard and Poor until they found something plausible, after S&P downgraded Treasury bonds from AAA to AA. That was the Obama administration being vindictive.

      Martin Shkreli cannot be confused with Standard and Poor. He’s been widely reported by drug industry journalists of doing just what the SEC said he did, and the timing of his 5000% price increase for a fifty-year old drug and these charges, for once, looks pretty coincidental. Maybe he didn’t send the right check to the right family’s charitable foundation… which might have saved him a whole world of hurt.

  14. Rule (of 5) Breaker says:

    “Merry Christmas, everyone”

  15. alchemist says:

    Say what you want, he is a real class act

    (attention, sarcasm alert!)

  16. Enough! says:

    Clearly the guy is an ass. That doesn’t make him wrong about drug pricing. Maybe the pharmaceutical industry should be charging more, laying-off less, and paying their scientists better.

    1. adam says:

      Except he wasn’t paying scientists. At all. He was rent-seeking on the work of scientists from other companies.

      1. David says:

        Plenty of jobs listed on Turing’s web site for actual scientists.

        1. loupgarous says:

          They must have hired them quick, or run out of cash to.

          All I see there is “Director, Project Management CMC”, which isn’t a scientific post.
          “Director of project management will develop and deliver on manufacturing and supply chain strategy, CMC goals and budget. ”

          Sounds like a telephone sanitizer to me.

  17. The Gza says:

    Since he’s such a fan of the Wu, he should be tortured the way they describe at the beginning of Method Man.

    “I’ll sew your —hole closed and keep feedin’ you, and feedin’ you, and feedin’ you”

  18. Jeffrey Ranalletta says:

    Isn’t there a song that goes:

    “You don’t tug on Superman’s cape, you don’t something,,,something…something,.”

    1. honey badger says:

      beautiful! – this article is too good to be true, but here’s hoping that it is!

      1. Vic says:

        It is too good to be true. The New Yorker’s Borowitz Report is satire.

        And in this case, the satire is pitch-perfect.

  19. karl says:


    Scribd has a pdf of his indictment…


  20. Mike B says:

    When does the movie come out and who’d be the perfect character to play Shkreli?

    1. loupgarous says:

      Q: “When does the movie come out and who’d be the perfect character to play Shkreli?”

      A: Tom Cruise, before he goes in the slammer
      Mel Gibson, after he gets out

      A little make-up, a little LOTR-type CGI, nobody’ll tell the difference

  21. Pennpenn says:

    Hey, I’m all for seeing this guy get his due process and a fair trial. It’s just that on an unrelated reasons I’d also like to see him be shot into the sun.

    Hopefully this can kill two birds with one stone.

  22. Anon says:

    I wonder if he’ll be able to afford Daraprim once he gets out of jail…

  23. Ltw says:

    Whether he’s guilty or not, and whether you like him or not, no one should be happy about the way this has been handled. Why was a non-violent defendant handcuffed and perp walked? Who tipped off the press to be there at 6:30am? Why did investigations only start last year for something that happened in the mid-2000s?

    It looks like a naked display of state power. And even if you feel he deserves it, it shouldn’t be that way.

    1. fajensen says:


      Non-violent, non-wealthy, people encountering “law enforcement” risks getting shot right on the spot or have an SWAT team busting in during the night (and getting the dog shot at least). *That* is naked state power, like we see it in places like Syria and Iraq. The Gestapo-wannabees are even rubbing our faces in it when the officers involved are routinely cleared of any wrongdoing.

      This guy is getting the kids gloves and we are supposed to feel unhappy about that? Really!?

    2. Curt F. says:

      Excellent points LTW.

    3. Pennpenn says:

      I just hope you aren’t crying out against this because it’s a wealthy white guy. Non-violent, non-wealthy get far worse than this every damn day in the US.

  24. enl says:

    The only chain I can make with regard to this is: There are a lot of people in prison with HIV. Mean people. People that don’t want their medication tampered with. People that have nothing but time.

    I’ll make a guess that Shkreli cuts a no-prison deal when things start to look bad.

    1. Ltw says:

      And this is exactly how federal agencies keep their conviction rates up. By filing overblown charges and giving people two options:
      a) take your chances, by the way, prison rape if you fail.
      b) plead to a lesser charge, we let you go but still record a conviction, and you have to spend the rest of your life arguing that your guilty plea was under duress.

      Even for a manipulative, rent seeking chancer – that’s playing rough. And even though everyone likes seeing him go down – remember, it could be you next.

  25. PorkPieHat says:

    Free the Wu-Tang Clan album!

  26. optmo says:

    Can they increase his bail by, let’s say 5000%? or is it too late?

  27. loupgarous says:

    The Obama administration overreaches in some ways, and they have refined the practice of “selective prosecution” to an art form, but the charges against Shkreli are very plausible (as opposed to when the US Department of Justice revoked Sam Bacile’s probation for using the Internet, by way of reproof for uploading “The Innocence of Muslims” to YouTube, which can only be considered a crime against cinematography).

    Shkreli’s well-known here as a fast-and-loose corporate player. I’ll wait for the court case (assuming DoJ doesn’t offer him a plea deal he’d be insane to pass up) before saying more, but this is one case where public outrage may just have lead to a justified outcome.

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