FBI arrests controversial Turing CEO Martin Shkreli on securities fraud charges

Martin Shkreli

Pharma's price-gouging poster boy Martin Shkreli was arrested by the FBI Thursday, Reuters reports. The Securities and Exchange Commission and Department of Justice had been investigating Shkreli, CEO of Turing Pharmaceuticals, amid a controversy over his 5,000%-plus price hike on the toxoplasmosis drug Daraprim.

According to Bloomberg, Shkreli has been charged with securities fraud.

The federal investigations centered on Shkreli's former hedge fund, MSMB Capital Management, and Retrophin Pharmaceuticals ($RTRX), a company he founded. Shkreli served as CEO there until the board dismissed him last year. He had pursued a similar pricing strategy at that company--Retrophin purchased an older drug that sold for $135 per month and increased the price to $1,800 to $2,700 per--but his firing stemmed from alleged financial shenanigans.

Retrophin sued Shkreli in August for more than $65 million in damages, alleging he mismanaged the company's money, using cash and shares to settle personal debts and keep MSMB Capital afloat, FierceBiotech reported at the time. When MSMB investors threatened to sue over the fund's losses, Shkreli got Retrophin to pay them more than $2.7 million in cash and hand over nearly 600,000 shares, the lawsuit claims.

Reuters witnessed the arrest, the news service says.

Since news of Turing's Daraprim price hike hit, Shkreli has been unapologetic about the strategy, and has actually purchased another drug with plans to jack up the price enormously. He claims that future R&D justifies his price increases. The broader biopharma industry has tried to distance itself from Shkreli, and the trade group PhRMA accused Turing of behaving like a hedge fund rather than a pharma company. His arrest puts Shkreli farther beyond the pharma pale and may shift the focus on his alleged financial misdoings rather than his pricing strategies.

- see the Reuters news
- get more from Bloomberg

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