Martin Shkreli goes live several times a week. The streams run past nine hours. Viewers call in with investing questions. On Tuesday, Oct. 13, the Federal Trade Commission and seven states told a federal judge in Manhattan what they think of that. A judge barred him from owning drug stocks in 2022. Regulators say he's been trading them on camera anyway.
Here's the record, as the Journal's Xavier Martinez lays it out. Shkreli is 43. In 2015 the company he ran bought an old anti-parasite drug, Daraprim, and raised the price to $750 a pill from less than $20. He defended it loudly online and became known as the "pharma bro." In 2017 a jury convicted him of securities fraud. Prosecutors said he cheated his hedge-fund investors and used his drug company's money to pay them back. He got seven years and was released early in 2022.
That same year a federal judge barred him from owning stakes in drug companies and from making public statements meant to sway their business. The judge found his old company had illegally blocked a generic rival to Daraprim. Regulators now allege he ignored both rules. Their filing says he's held shares of more than 60 drug companies since 2022. It says he often put his brokerage screen on the stream for everyone to see.
Betting on failure
The trades ran one way, regulators say. He shorted companies such as Cassava Sciences (SAVA), INmune Bio (INMB), aTyr Pharma (ATYR) and Capricor Therapeutics (CAPR). A short is a bet that a stock falls. Three of the four had key drugs fail in trials. After Cassava's Alzheimer's drug failed in November 2024, his Interactive Brokers (IBKR) account grew from $138,200 to $841,000, the filing alleges. In June he began a new on-air trading challenge with a $10 million account, regulators say. They say he's now short Sellas Life Sciences (SLS) and has told viewers its leukemia study will fail.
Regulators want him to sell the stocks and pay a fine equal to every dollar of trading profit since February 2022, with no credit for losses. They're asking for rising fines and jail if he refuses. He didn't respond to the Journal. New York's attorney general said in a release that his actions "put investors and the public at risk." These are allegations. A judge hasn't ruled.
Our read
This is Insurance/Consumer Protection (M11). The planning lesson is about the stream, and it holds for any stream. A stock tip arrives with a face and a confident voice. It rarely arrives with a record. Here the record is public. A fraud conviction. A lifetime ban. And, regulators say, a run of bets that a drug trial fails. Biotech trades like that are binary. One press release and the stock can lose most of its value, or double, before you've read the headline. Nobody on a call-in show owes you a thing when it goes the wrong way.
The piece of your plan this touches is your own brokerage app, and the list of people you let into it. The check this week has two steps. First, open the app and look at your five smallest positions. For each one, name where the idea came from. If the answer is a stream, a post or a call-in show, you own a tip, and a tip isn't a plan. Second, take the name of anyone whose picks you follow and run it through FINRA's BrokerCheck and a plain news search. It takes five minutes. Shkreli's history was one search away the whole time. If a position fails the first step, bring it to a review before you add to it. You don't test the smoke alarm by waiting for smoke.