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Martin Shkreli Arrested on Securities Fraud Charges

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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 23433 / December 17, 2015

Securities and Exchange Commission v. Martin Shkreli, Evan Greebel, MSMB Capital Management LLC, and MSMB Healthcare Management LLC, Civil Action No. 15-cv-07175 (E.D.N.Y.)

SEC Charges Martin Shkreli with Fraud

On December 17, 2015, the Securities and Exchange Commission charged Martin Shkreli, former CEO of pharmaceutical company Retrophin, with committing fraud during a 5-year period when he also was working as a hedge fund manager.

The SEC alleges that Martin Shkreli misappropriated money from two hedge funds he founded and made material misrepresentations to investors among other widespread misconduct. The SEC also charged Retrophin's former outside counsel and corporate secretary Evan Greebel with aiding and abetting certain aspects of Shkreli's alleged fraud.

According to the SEC's complaint filed in federal district court in Brooklyn:

Shkreli was portfolio manager for the hedge fund MSMB Capital Management LP from October 2009 to March 2014, and also served as portfolio manager of another hedge fund he founded and controlled named MSMB Healthcare LP.

Shkreli misappropriated about $120,000 from MSMB Capital Management from October 2009 to July 2011 to unlawfully pay for food, clothing, medical expenses, clothing, office rent, and cash withdrawals.

Shkreli misled investors and prospective investors in MSMB Capital Management about the fund's size and performance, claiming for example in July 2010 to have "returned +35.77% since inception on 11/1/2009." In fact, the fund generated losses of about 18 percent.

In another example, Shkreli falsely stated in December 2010 that the fund had $35 million in assets under management. In fact, the fund had less than $1,000 in assets in its bank and brokerage accounts.

Shkreli lied to one of MSMB Capital Management's executing brokers in February 2011 about the fund's ability to settle a sizeable short sale in a pharmaceutical stock in MSMB Capital Management's account. This transaction resulted in losses of more than $7 million to the executing broker who had to cover the short position in the open market.

Shkreli misappropriated $900,000 from MSMB Healthcare in 2013 to settle claims asserted by MSMB Capital Management's executing broker arising out of the losses suffered in the short selling transaction.

From September 2013 to March 2014, Shkreli, with assistance from Greebel, fraudulently induced Retrophin to issue stock and make cash payments to certain disgruntled investors in Shkreli's hedge funds who were threatening legal action. Shkreli and Greebel had investors enter into agreements with Retrophin misleadingly stating the payments were for consulting services when in fact the purpose was the release of potential claims against Shkreli.
The SEC's complaint charges Shkreli with violating Sections 17(a)(1) and 17(a)(2) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rules 10b-5 and 10b-2. He also is charged with violating Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8. Greebel is charged with aiding and abetting Shkreli's violations of Exchange Act Section 10(b) and Rule 10b-5. Two Shkreli-owned entities that served as investment advisers to the hedge funds, MSMB Capital Management LLC and MSMB Healthcare Management LLC, are charged with violations of the antifraud provisions of the Investment Advisers Act, and Shkreli is charged with aiding and abetting those violations.
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http://www.sec.gov/litigation/litreleases/2015/lr23433.htm

He's got FBI, SEC and Retrophin after him.
 
gamechanger87 said:
He knew. The SEC started requesting information from him back in 2012. Usually takes three years from starting to charges being filed. It also sounds like the FBI had contacted him as well. Like I said earlier he knew it was coming so started going crazy to get as much as he could before he went away.
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Also, cocaine is a helluva drug.
 
Retsudo said:
AHAHAH i hope this piece of shit gets the retribution he deserves.
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He won't. He might be disgraced a while, but he'll crawl his way back. The guys up top all share the same character traits this guy does, they just keep it behind closed doors.
 
8bit said:
CWcAZ4-WcAAB5TA.png


https://twitter.com/wisemana/status/677510714236510209
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we live in amazing times
 
billeh said:
So he'll end up in some minimum security country club prison for a few years? Ouch. Justice.
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Nah man, this:

In another example, Shkreli falsely stated in December 2010 that the fund had $35 million in assets under management. In fact, the fund had less than $1,000 in assets in its bank and brokerage accounts.
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is serious. That's some Bernie Madoff shit. If he is found guilty, he's going away for a while.
 
On one of his streams a couple of days ago I tuned in live for five minutes and someone asked him about the Wu Tang album and he said "I haven't heard it" so I think it's still going through the legal process. I tried searching his archive but couldn't find it.

wild wild rice said:
What the fuck is a live stream? People do this? Like sit in front of a camera for 3 hours, do nothing and post it online? Seems like this dude has a bunch uploaded as well. Am I officially old and out of touch?
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Or maybe the dude who jacks up drug prices, holds popular music hostage, and is a social pariah is out of touch?

theultimo said:
Did somebody post his live stream last night? Where he hung up on the FBI?

At 1 hr 22 min 4 sec
https://youtu.be/I-4D6yj-cR4
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To be fair that doesn't sound like the FBI.
 
Nexttothecheddar said:
He really won't be walking away. Some of the charges are the same that Bernie Madoff got nailed with and he's serving 150 years even with pleading guilty.
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Pretty much. The NYT article paints a picture of an incompetent investor and businessman who was only "good" at being a con-artist and covering up his losses. Fake consulting contracts, lying about assets and income, using corporate money to cover his failed funds; he's going away for a long time, and the investor lawsuits will hound him even longer.
 
billeh said:
So he'll end up in some minimum security country club prison for a few years? Ouch. Justice.
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No. I understand why everyone thinks that, but read into it a little. He's in serious trouble, and he's going to federal prison if convicted. And he will be convicted because the FBI and SEC don't play around, and don't make a move until they're sure they have a winnable case.

Not to mention he will likely be financially ruined because of the old company coming after him. So real justice.

Takuan said:
He won't. He might be disgraced a while, but he'll crawl his way back. The guys up top all share the same character traits this guy does, they just keep it behind closed doors.
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Think Madoff-levels of trouble. He's not going to bounce back.
 
BearFlexington said:
The Caped Crusader brings justice in time for the holidays.

Screen_Shot_2015_12_17_at_1_25_15_PM.png
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The fact that people think he got in trouble for this is absurd. He got in trouble for stuff he started back in 2012 and the SEC started its investigation back then. This has nothing to do with it. His fraud got reported back in 2012 by one of his investors which kicked everything off

In the fall of 2012, the SEC opened an investigation entitled “In the Matter of MSMB Capital Management LLC Valuation” (the “SEC Investigation”). On or about October 1, 2012, the SEC issued a subpoena to MSMB Management asking for documents showing MSMB Capital and MSMB Healthcare’s assets under management. In response, Shkreli created a “Schedule of Funds Managed by MSMB” which showed that MSMB Capital had $2,600,000 in assets under management as of November 4, 2012, the date of Shkreli’s submission to the SEC. In fact, MSMB Capital had no assets under management.
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Lawyer for Martin Shkreli Hikes Fees Five Thousand Per Cent

A criminal lawyer representing Turing Pharmaceuticals chief Martin Shkreli has informed his client that he is raising his hourly legal fees by five thousand per cent, the lawyer has confirmed.

Minutes after Shkreli’s arrest on charges of securities fraud, the attorney, Harland Dorrinson, announced that he was hiking his fees from twelve hundred dollars an hour to sixty thousand dollars.

Shkreli, who reportedly received the news about the price hike while he was being fingerprinted, cried foul and accused his attorney of “outrageous and inhumane price gouging.”

“This is the behavior of a sociopath,” Shkreli was heard screaming.

For his part, Shkreli’s lawyer was unmoved by his client’s complaint. “Compared to what he pays for an hour of Wu-Tang Clan, sixty thou is a bargain,” he said.

http://www.newyorker.com/humor/boro...tin-shkreli-hikes-fees-five-thousand-per-cent
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LOL
 
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