
Martin Shkreli Arrested on Securities Fraud Charges - choult
http://www.bloomberg.com/features/2015-martin-shkreli-securities-fraud/
======
dang
The curiosity being gratified here cannot remotely be called "intellectual".

[https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)

~~~
tim333
I googled "intellectual" and the first words were:

"An intellectual is a person who engages in critical study, thought, and
reflection about the reality of society, and proposes solutions for the
normative problems of that society"

You could argue Shkreli's behaviour was a problem of society that
intellectuals would be curious as to the solution thereof?

~~~
dang
Sure, one can be intellectually curious about anything. But the Dionysian
frenzy we actually see in cases like this has nothing in common with that.

What happens when somebody does bad things, especially repeatedly, is that
others seize on it as a socially acceptable way to get their anger out. That
may be human nature, but it's the epitome of what we don't want here.

------
gizmo
It was alleged that Martin Shkreli harassed an ex-employee, including spouse
and their children. Quoted: "I will see you and your children homeless"[1], in
a sworn affidavit.

Although Shkreli never explicitly denied it, he had implied the accusations
were false. Until yesterday, where he bragged about it during an interview
with DX:

    
    
         I’m definitely the real fucking deal. This
         is not a fucking act. I threatened that
         fucking guy and his fucking kids because
         he fucking took $3 million from me and
         he ended up paying me back. He called my
         bluff. He said, “You’re not fucking going to
         go after me.” [I said] “Yes I motherfucking
         will.” I had two guys parked outside of
         his house for six months watching his every
         fucking move. I can get down. I don’t think
         RZA knows that. I think he thinks I’m
         some powder puff white guy CEO that’s
         got too much money. No. No, no, no.
    

Not the kind of behavior you'd expect from the CEO of a publicly traded
company.

[1] [http://mic.com/articles/125657/turing-ceo-martin-shkreli-
wan...](http://mic.com/articles/125657/turing-ceo-martin-shkreli-wanted-to-
make-former-colleague-and-family-homeless)

[2] [http://hiphopdx.com/interviews/id.2825/title.martin-
shkreli-...](http://hiphopdx.com/interviews/id.2825/title.martin-shkreli-
plans-to-bail-out-bobby-shmurda)

~~~
DanielBMarkham
Yes. I do not know this man and I have no idea of his habits, but we're
entering into "You need to stop doing that damned cocaine" territory -- that
is, whether the cause is intrinsic or extrinsic, it appears to the casual
observer that he is suffering from severe personality problems.

Makes you wonder who made or approved of him being CEO.

~~~
gizmo
He's the CEO of two companies.

In the case of Turing Pharmaceuticals he's the CEO because he founded the
company and it's funded by his hedge fund buddies, who like him because they
made a lot of money from his hedge fund MSMB, despite the hedge fund being a
failure.

He'a also the CEO of KaloBios. In that case he bought, with the same buddies,
70% of the company stock. As the new majority shareholder he simply appointed
himself CEO.

~~~
Osiris
KaloBios is down 50%: [http://www.marketwatch.com/story/martin-shkreli-losing-
over-...](http://www.marketwatch.com/story/martin-shkreli-losing-
over-25-million-on-his-kalobios-stock-2015-12-17)

------
bedhead
Quick reminder that he was arrested for SECURITIES fraud - this isn't related
to drug prices. Feel free to read the lawsuit filed against him by his former
company to understand why Martin got arrested.

The guy is a pure sociopath. I had long ago predicted this day would come and
it's quite nice to see. Will be happier when he's convicted and sentenced.

[http://www.sec.gov/Archives/edgar/data/1438533/0001193125152...](http://www.sec.gov/Archives/edgar/data/1438533/000119312515292581/d19898dex991.htm)

~~~
marincounty
People throw around the word sociopath. I have know a few sociopaths. I have
been told, I have sociopathic tendencies.

That said, I would never take advantage of the poor, weak, or helpless.

If you have sociopathic tendencies--work on them! Whatever you do, don't cross
that line where you think it's ok to take advantage of the aforementioned.

I live among a lot of wealthy sociopaths. They are in complete denial, and
actually believe, "Hay it's legal! I did nothing wrong? I'll even go to
church, or synagogue!".

I look at them with utter disgust. The sociopaths, I know, haven't done the
damage to society like this little puke.

I don't care about his SEC violations. Every trader--strike that--successful
traders; cheated on order to get their wad. They all use inside information.
Yes, there's some of you who got luckey on this momentum trading these last
few years--great. I'm talking about the series 7 boys who always seen to make
money.

Raising the price on a drug, a drug that he knew sick patients would be paying
"out of pocket" for--that's a true scumbag. The word sociopath is too nice.

~~~
mikeash
I wonder why you're being downvoted. Reflexive instinct for someone who admits
they have sociopathic tendencies?

~~~
oldmanjay
Because armchair psychiatry and textbook class hatred is not really an
interesting contribution to the conversation. The HN bar is higher than mere
handwringing.

~~~
mikeash
But all the comments saying "this guy is a sociopath" or "all big-company CEOs
are sociopaths" or "here's a pop-psychology book about sociopaths" are?
They're not getting downvoted....

------
jacquesm
Shkreli is a total asshole but let's not forget that large pharmaceutical
companies use the exact same strategies on many drugs only with prices lowered
just enough to stay this side of outrage. Life is 'priceless' and people will
pay anything to extend their lives so if all that stands between you and the
grim reaper is a patented molecule you can bet that that molecule is an
expensive one. Whatever the market will bear is not always something
reasonable.

~~~
yummyfajitas
Lets also not forget that if you can't make money off lifesaving drugs, you
also won't bother to invent any new ones. It seems to make people angry that
greedy folks make money by saving lives, but lets remember that one likely
alternative to this is greedy folks _don 't_ make money by _not_ saving lives.

Putting my investor hat on, I generally believe that making rich people pretty
is a far less risky investment than making sympathetic sick people healthy - I
won't become public enemy #1 by charging a fortune for Botox 2.0.

(None of this is meant as commentary on the specifics of this guy - the media
has decided he's a villain, prosecutors can boost their career by targeting
him, and I have no way to determine the truth of the matter.)

~~~
littletimmy
Why can't we have the government fund pharmaceutical research?

~~~
mseebach
Because you'd ultimately have politicians direct research, based on what makes
the best photo-ops up to the next election as well as the inevitable old-boys-
club/revolving-doors "corruption-light" that quickly infects expensive
government programs.

Whatever the aesthetics of people getting rich from treating sick people, on
the evidence, it's actually very effective.

~~~
littletimmy
Well, we do have an example of a governmental agency that is free from
political control, i.e. the federal reserve. We could have something like that
for research, can't we? After the appointment of a governor, the organization
could function on its own without politics. Other examples include supreme
court of the United States, BBC in the UK etc.

~~~
logfromblammo
The problem is that the price system is the best resource allocation scheme
that humans have ever attempted at scale.

When you sever the external link between the product going out, and the money
coming in, you destroy some of the positive or negative feedback loops that
take into account what people actually _want_ and what they can _do_.

There has to be a hard external link between the outputs and the inputs, or
you end up with a situation where rent-seekers charge in and gum up the works,
absorbing resources without doing anything _economically useful_ in exchange.
The instant you guarantee a cash flow independent of actual results, you
create sinecures, and those offices fill up and never go vacant again.

You could end up with situations where the agency _cures_ a disease, but
spends 100 times more doing that than it would cost to develop an _acceptably
effective treatment_ and also create a foundation that could pay to produce
and distribute that treatment to everyone who gets it any time within the next
5 billion years.

Yay, woo, we cured it. But our inability to effectively prioritize resources
meant that 99% of that cure budget was _not_ spent on researching diseases
that have a far greater economic impact. Oops.

 _Someone_ has to decide whether the money is well spent. And if that
_someone_ isn't _everyone_ , then there is an agency problem, and rent-seekers
scramble over each other to be the _someone_ , so they can easily profit from
that decision-making power.

Now, before anyone goes shaking their pompoms for the free market, I should
mention that we haven't actually had one in medicine for a _long_ time, thanks
to the godawful market distortions that currently exist in the healthcare
sector of markets where most treatments are researched. But at least that
market-side link in the feedback loop still exists to some tiny extent, no
matter how weak or tenuous it may be now.

So an independent research agency would be great for about 15 years. After
that, it will start to become a gigantic black hole of waste and inefficiency.

------
patorjk
Given this guy's character, it's not too surprising. Not only is he greedy,
but he seems to take a lot of joy in trolling people. If you look at his
twitter feed, he gushes about buying the only copy of Wu Tang's previous album
and talks about putting holes in the discographies of other artists. Last week
he had a public poll about who he should solicit for a private album. It seems
like he takes a lot of glee in riling people up.

~~~
drzaiusapelord
>gushes about buying the only copy of Wu Tang's previous album

Seems like people should be a lot more pissed at Wu Tang than this guy.
Private album sales from groups with millions of fans is just an asinine idea.
Why do they get a free pass here?

~~~
Bud
Speaking as a performer myself, what Wu Tang Clan did basically amounts to
giving a private performance. They're not allowed to do that? Why not?

------
nomercy400
Convenient.

To have the guy that abused the system to such extremes that the people and
media noticed it, pressuring government to regulate, be taken into custody for
something unrelated to this. As if they couldn't have found this a year ago.

It really sounds like "let's find some dirt on this guy".

~~~
myblake
Yeah it does, which is not surprising and while pretty fine in this case can
be pretty horrible in others.

------
aikah
> Prosecutors charged him with illegally taking stock from Retrophin Inc., a
> biotechnology firm he started in 2011, and using it pay off debts from
> unrelated business dealings. He was later ousted from the company, where
> he’d been chief executive officer, and sued by its board.

~~~
Already__Taken
Is it not illegal to not report a crime? How can all the parties involved in
public trading have not noticed something they had to report.

Aren't parties who are having a debt paid to them interested some diligence
the money is legitimate? I mean it's my problem if I unknowingly by a stolen
car.

~~~
wrong_internet
_Is it not illegal to not report a crime?_

Pretty sure this only applies to the ethics standards of psychiatrists, et.
al. I don't think a normal citizen is required to report crime.

~~~
nraynaud
In France it would be the end of their career for a professional bound by
secret (doctors, lawyers etc.) to report a crime confessed during a session.
But they have pretty persuasive power, I know some lawyers advised some people
to confess very gritty crimes to the police.

But normal citizens could go to jail for not reporting.

------
brudgers
We're not meant to cheer this as a win for financial fair play. It's meant to
evoke our self-righteousness. It's prosecutorial discretion with the same
logic that this community decries when applied to other people whose
violations of law or social mores we find more sympathetic.

~~~
ohitsdom
I don't understand your argument. "meant to evoke our self-righteousness"\-
meant by who? What prosecutorial discretion? Sounds like he pretty clearly
broke the law, and didn't even try to hide it.

~~~
brudgers
My gut is that prosecutions for financial market misdealings are about as
selective as the issuance of speeding tickets, i.e. most of the time those who
can enforce the law look the other way. They do so in part because it's
trifling and in part because there's so much of it and so few of them.

To put it another way, the amounts involved are rounding error and the article
doesn't list any serious effects of the charged misdeeds. Instead it's all
about comeuppance for something that was legal. The outrage is over raising
the price by a bit player. The big players simply charge a lot to begin with
for life saving treatments such as chemotherapy drugs...a lot more than a few
hundred dollars a dose.

YMMV.

------
sergiotapia
He was live streaming last night on YouTube from some hotel. Even gave out his
cellphone number and was taking questions about investing and whatnot. Was he
arrested this morning? He was streaming at around 3am, 5 hours ago.

[https://www.youtube.com/watch?v=I-4D6yj-
cR4](https://www.youtube.com/watch?v=I-4D6yj-cR4)

~~~
desuvader
I believe that is his apartment, unless you meant that he maybe lives at a
hotel (?).

------
dnautics
am I the only one bothered by this? As a bit of a disclaimer, I am disgusted
by what Shkreli is doing in the pharma business (if anyone doubts this, I run
a nonprofit dedicated to the opposite of what he's doing).

But what it says is that the SEC is motivated by sometimes petty reasons to go
after people that are indirectly related to actual commission of SEC
violation. Which of course, every CEO makes pretty much every business day. If
the SEC were neutral, why didn't they find and eliminate Shkreli _before_
social media got all hot to trot on hating him? The SEC is basically saying,
well, he's unpopular, we have the power to take him out, let's do it.

Something about that seems wrong to me.

~~~
yesbabyyes
No, it's not about that. Apparently an interview was published only yesterday,
where Shkreli was trash-talking and threatening the RZA.

And as we all know, Wu-Tang Clan ain't nothin' to fuck with.

QED.

------
wanda
What kind of person would think that they could get away with such blatant
extortion and embezzlement? In this day and age?

~~~
MrBuddyCasino
Basically everyone on Wall Street?

~~~
Angostura
Sorry, but I get really sick of this kind of low quality knee jerk. "Everyone"
\- really?

And no, I don't work in the financial industry.

~~~
chinathrow
Well, if you look at how the big banks got fined in the last 10 years, it's
"Everyone" as in "every big bank".

~~~
matthewbauer
But that's not everyone working at the big bank.

------
mtalantikite
Hopefully this makes Bill Murray's job a lot easier:
[http://www.theverge.com/2015/12/11/9890908/rza-bill-
murray-w...](http://www.theverge.com/2015/12/11/9890908/rza-bill-murray-wu-
tang-clan-album-heist)

------
meesterdude
Best news of the day! Glad that little dipshit has some justice coming his
way. But lets not forget, there are many, many more people just like him

~~~
peter303
The system is biased toward drug monopolies. He merely exploited it.

------
zghst
Pretty sure some Feds were looking to pin him after his story broke earlier
this year. Protip: Be a quiet or unknown capitalist oppressor

------
AKifer
The price of flying too high, there's a reason big pharma executives rarely
show in the front media.

~~~
estefan
"flying too high" or acting like a complete, arrogant scumbag?

~~~
sweezyjeezy
You can act how you want behind closed doors. This guy did it on TV, on
Twitter, on reddit etc. etc. That was his mistake.

~~~
estefan
Jacking up the prices of those drugs was a pretty public act even if he
decided it behind closed doors...

------
padseeker
How will his arrest affect the price of the drug? That is really the only I
care about.

~~~
apocalyptic0n3
There's a senate committee currently investigating the common theme of
companies buying out-of-patent drugs that have a small market and marking them
up immediately after purchase. His arrest might add a bit of fire to the
argument, but I suspect it won't have much effect in the long run.

For the record, though, they are looking at the industry as a whole, not just
his company and the few drugs he did this with.

------
ehosca
when is he running for president?

------
MrZongle2
"The password is... _schadenfreude_ ".

------
jaboutboul
They only arrested him because he was about to bail out Bobby Shmurda and the
feds don't want Bobby Shmurda out.

------
ninjakeyboard
Wait, so he bought a million dollar record and then stole money that he gouged
sick people for to pay it off? If he just kept the drugs at the same price and
didn't buy the record the world would be a better place and he wouldn't be
going to jail. I thought he said he did the price gouging for the
shareholders, not for WuTang.

------
toxoid
I wonder if he will be able to afford Daraprim when he gets out of jail...

------
MrPatan
Couldn't have happened to a nicer chap.

------
adamsea
What goes around comes around

------
DominikR
I agree that if the allegations are true, Martin Shkreli is an immoral person
to say the least, but I wonder about one thing:

The whole conduct of the prosecutors doesn't look impartial to me. It seems as
if someone was vilified by the media and next thing you know he is arrested
and charged with fraud in an unrelated case.

As if this was still a society where you had to slaughter the occasional
sacrificial lamb to appease the anger of the people.

------
powertower
If you want to see what he does in his spare time -
[https://www.youtube.com/channel/UC8gjB1PSXv_oAUSAQ16S0fA](https://www.youtube.com/channel/UC8gjB1PSXv_oAUSAQ16S0fA)

------
talideon
Couldn't happen to a nicer guy.

------
BrandonBradley
I hope Wu-Tang and/or Bill Murray make a move. Right now!

------
gotchange
What do they say about karma?

~~~
15thandwhatever
In this particular case, "karma" appears to be "upsetting the morals of enough
people, that regulatory and prosecutorial parties become invested in digging
up enough of your past until they find something that sticks".

I believe the word you're looking for is "witch hunt".

I'm not saying I agree with the guy, or defend his actions in any
circumstance.

I'm just saying that if you told folks "the world is round" during the flat
era, you'd be treated and investigated the same way.

~~~
pionar
>I believe the word you're looking for is "witch hunt".

It's not a witch hunt. Dude's been under investigation for 3 years.

The article states this:

"The Securities and Exchange Commission, which according to court documents
opened an investigation into Shkreli in 2012, is expected to file a parallel
civil complaint against him, according to people familiar with the matter."

~~~
15thandwhatever
Here's another case in the same vein, where a very public CEO with strong
opinions had lost a decision in a very nasty sexual harassment case (while
stating even more of his strong opinions in the duration of the case) which
wasn't going to put a dent in his net worth, but later picked up on securities
fraud: [https://www.fbi.gov/newyork/press-releases/2015/benjamin-
wey...](https://www.fbi.gov/newyork/press-releases/2015/benjamin-wey-founder-
and-president-of-new-york-global-group-arrested-and-charged-in-manhattan-
federal-court-for-securities-fraud-arising-out-of-fraudulent-reverse-merger-
scheme-involving-chinese-companies)

I don't care for their actions, I'm concerned about the subjectivity of legal
scrutiny.

------
alistproducer2
I started a GoFundMe to support Martin. Please donate so we can keep him
stocked with Vaseline while he's doing time in federal prison.

~~~
alistproducer2
Jesus guys, it was just a joke. People are so sensitive.

------
SwellJoe
This guy seems more and more like a comic book villain every day. The next
step, I suppose, is when he's sentenced to spend eleven days in a minimum
security prison and he falls into a vat of industrial chemicals while working
in the laundry. It turns him even whiter and he takes on a silly name, and
disappears into the night, embarking on a spree of ne'er-do-wellery.

Then again, he's already screwed over a lot more people as CEO of a
pharmaceutical company than he probably could as a super villain. It takes the
efficiency of capitalism to achieve real evil, I guess.

------
bko
I don't know the details of this particular case but whenever I see a very
public figure arrested, no matter how reviled, I grow a bit concerned. Despite
being sleazy and unethical, his raising of drug prices was not against the
law. Financial law was written purposely vague such that it can be used a
hammer to arrest those who dissent from the will of those in power.

Yulia Tymoshenko, former prime minister of Ukraine was convicted of
"embezzlement and abuse of power". Julian Assange, editor-in-chief of
Wikileaks is facing extradition. Elliot Spitzer, former attorney general, was
ousted from power due to a prostitution scandal that appeared targeted.

Whatever you think about US health care and drug prices, we should not rely on
a system that requires individual actors to be good people. We should strive
for a system that does not require moral actors to function.

Of course I could be wrong. Shkreli arrest could be legit and be purely
coincidental to the outrage that he has drawn.

~~~
johnpowell
Try reading the article. The arrest is not for raising drug prices.

~~~
wrong_internet
You missed the OP's point. Most of us unknowingly commit major crimes in the
course of our day, just given the sheer volume of statutes arrayed against us.

OP is referring to when prosecutorial discretion permits "the powers that be"
to use this fact against people who fall into disfavor.

~~~
carbocation
According to TFA, the investigation started in 2012, long before his
notoriety.

