‘Pharma Bro’ Martin Shkreli Banned for Life From Public-Company Roles

(Bloomberg Law) -- Martin Shkreli owes the SEC more than $1.39 million and is permanently barred from serving as a public company officer or director for his participation in “multiple” securities fraud schemes, a federal judge in New York said.

The former pharmaceutical company CEO, better known as “Pharma Bro,” faced Securities and Exchange Commission allegations of misleading investors in a hedge fund he founded and misappropriating funds. He’s “unfit to serve as an officer or director of any public company,” the U.S. District Court for the Eastern District of New York said.

Shkreli, 38, is serving a seven-year sentence at a federal prison in Pennsylvania on a related criminal conviction, and federal records show he is slated for release in November.

Shkreli’s “repeated, deliberate falsehoods” to hedge fund investors “resulted in significant losses,” Judge Kiyo A. Matsumoto’s order said. And he “undertook further fraudulent conduct in order to absolve himself of potential claims from the disgruntled investors he left in his wake.”

The case record shows Shkreli has “either an inability or an unwillingness to truly recognize the ‘wrongfulness’ of his egregious violations of securities laws,” Matsumoto said. He expressed acceptance of responsibility for his actions “only once.”

Shkreli argued that a permanent bar would be excessive because he has “already been sufficiently deterred and punished” following a parallel criminal case. He instead sought at most a 10-year bar along with conditions on service as a public company officer or director after that period.

But Shkreli “consistently and brazenly deceived his investors, acting as a chaotic, dishonest, and untrustworthy corporate leader,” and his “relatively young age"—he turns 39 next month—means a shorter bar wouldn’t be enough to protect the public from the likelihood of future misconduct, the Wednesday order said.

Shkreli also challenged the SEC’s fine request. But he didn’t present any evidence suggesting he wouldn’t be able to pay, and his actions make third tier penalties appropriate as a punishment and a deterrent, Matsumoto said.

Seward & Kissel LLP and Brafman & Associates PC represent Shkreli.

The case is SEC v. Shkreli, 2022 BL 60690, E.D.N.Y., No. 1:15-cv-07175, order filed 2/23/22.

To contact the reporter on this story: Jennifer Bennett in Washington at jbennett@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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