Martin Shkreli investigation request by Citizens for Responsibility and Ethics in Washington (CREW)
Washington, D.C. –Today, Citizens for Responsibility and Ethics in Washington (CREW) asked Robert Khuzami, Director of the Securities and Exchange Commission’s (SEC) Division of Enforcement, to investigate certain hedge fund managers whose actions suggest they may be trying to manipulate stock prices in the biotechnology and pharmaceutical industries. This is the latest step in an ongoing investigation by CREW into the efforts of Wall Street investors to insert themselves into the regulatory process. The newest incident uncovered centers on investor Martin Shkreli and his questionable interactions with the Food and Drug Administration (FDA).
“Mounting evidence suggests Wall Street investors are intruding into the regulatory processes in order to manipulate the markets to move stock prices,” said CREW Chief Counsel Anne Weismann. “While it is perfectly legitimate to thoroughly research companies before investing, it is reprehensible to inveigle federal agencies into action just to make a profit.”
Documents CREW obtained through a Freedom of Information Act (FOIA) request to the FDA show numerous attempts by Martin Shkreli, Chief Investment Officer for MSMB Capital Management, to persuade the agency to reject certain pending drug applications. At the same time, Mr. Shkreli was shorting stocks in the companies that developed the new drugs. In one instance, Mr. Shkreli submitted a citizen petition asking the FDA not to approve a lymph node mapping drug, acknowledging he is not a medical expert and his hedge fund stood to gain if the FDA rejected the drug application.
Mr. Shkreli also wrote a blog post on a popular investing website predicting the drug would not win FDA approval, which sparked sharp backlash from other investors who characterized his claims as biased and possibly fraudulent. Immediately following these actions, shares of the drug company fell significantly, earning Mr. Shkreli significant sums of money.