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Controversial Turing CEO Arrested
Martin Shkreli, a lightning rod for growing anger over soaring prescription drug prices, has been arrested in New York by the FBI on securities fraud charges involving his former hedge fund and a pharmaceutical company he previously headed, according to a Reuters report.
Shkreli, who is now chief executive officer of Turing Pharmaceuticals and KaloBios Pharmaceuticals Inc., was charged in a federal indictment related to his time managing hedge fund MSMB Capital Management and heading the biopharmaceutical company Retrophin Inc.
Turing Pharmaceuticals sparked controversy earlier this year after it raised the price of pyrimethamine (Daraprim), a 62-year-old treatment for a parasitic infection, to $750 a tablet from $13.50 after acquiring it.
The new charges predate Shkreli’s term at Turing and relate to his management of New York-based hedge fund MSMB Capital Management, whose closure he announced in 2012, and his time as CEO of Retrophin from 2012 to 2014.
The indictment said Shkreli made false representations to MSMB investors to attract $3 million in investments. After MSMB experienced devastating trading losses in 2011 and ceased trading, Shkreli sent fabricated updates to investors touting profits of as high as 40% since inception, the indictment said. He also solicited $5 million from investors for another fund, MSMB Healthcare Management LP, while concealing his performance managing MSMB Capital and a prior fund and providing investors an inflated valuation of his then-private firm Retrophin, the indictment also alleged.
The case is separate from the ongoing drug-pricing controversy that has enveloped Shkreli and Turing Pharmaceuticals. At least two separate Congressional probes have been launched since September on the pricing issues with Daraprim, which had long been available as a generic drug used to treat toxoplasmosis in AIDS patients. Turing is under investigation by the New York state attorney general for antitrust concerns.
Source: Reuters; December 17, 2015.