Retrophin Founder Said Probed Over Securities DealingsChristie Smythe
Retrophin Inc. founder Martin Shkreli, replaced last year as chief executive officer of the biopharmaceutical company, is under investigation by U.S. prosecutors in Brooklyn, New York, for possible securities law violations, according to a person familiar with the matter.
Shkreli, a one-time short-seller who started New York-based Retrophin at 28, left his CEO post in September. Investors claimed in later lawsuits against him and the company that he distributed stock without the consent of shareholders.
Shkreli said in an interview today that he’s unaware of the probe and denied wrongdoing, including allegations in the lawsuits. Shkreli said he had a “difference of opinion” with his board over investing capital and stock options.
A prolific user of social media, Shkreli said on Twitter today that claims reported by Bloomberg News were “misleading and confused on an old situation that is no longer relevant.”
Shkreli also faces a probe by the U.S. Securities and Exchange Commission, according to the person, who requested anonymity because the investigation isn’t public.
Nellin McIntosh, a spokeswoman for U.S. Attorney Loretta Lynch in Brooklyn; Judith Burns, a spokeswoman for the SEC; and Tom Fernandez, a spokesman for Retrophin, declined to comment on the investigations.
Shkreli, who previously managed hedge fund MSMB Capital Management LLC, has faced criticism of his trading. In 2012, Citizens for Responsibility and Ethics in Washington, a watchdog group, asked U.S. Attorney Preet Bharara in Manhattan to investigate whether Shkreli manipulated shares of biotechnology and pharmaceutical companies by badmouthing them in order to drive down prices.
The group claimed Shkreli made postings on the website SeekingAlpha.com that spread “unfounded and inaccurate rumors about drugs owned by companies he was shorting,” and that he “inserted himself” into the Food and Drug Administration approval process for pending pharmaceuticals.
Betsy Feuerstein, a spokeswoman for Bharara, declined to comment on whether Shkreli was investigated. Stephen Santulli, a spokesman for the watchdog group, said in an e-mail that the group didn’t hear back after making the request.
According to an April 2014 profile in Bloomberg Businessweek, Shkreli, the child of working-class immigrants from Albania and Croatia, grew up in the Sheepshead Bay section of Brooklyn. As a college intern at a hedge fund formerly managed by Jim Cramer, the host of CNBC’s Mad Money, he made a name for himself by successfully recommending the short-sale of a biotech stock, according to Businessweek.
Retrophin focuses on the development, acquisition and sales of therapies for treating rare and serious diseases. It transitioned into a publicly traded company through a reverse merger with Desert Gateway Inc. in 2012. The company acquired Manchester Pharmaceuticals LLC for a total of $62.5 million last year.
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