FTC and States Seek Contempt Order Against Martin Shkreli for Alleged Ban Violation

Background of the Original Order

The Federal Trade Commission and a coalition of states filed a motion asking a federal judge to find Martin Shkreli in civil contempt of a 2022 court order that permanently barred him from any involvement in the pharmaceutical sector. The original injunction was issued after a trial concluded that Shkreli’s conduct had driven up prescription drug prices and blocked lower‑cost generics.

Alleged Violations

According to the FTC’s filing, Shkreli has allegedly breached the injunction by publicly trading stocks of pharmaceutical companies and broadcasting his opinions about their business and management on platforms such as YouTube, X and Reddit. The motion cites multiple livestreams in which Shkreli purportedly demonstrated trades, claimed to teach viewers how to invest in biotech, and promoted short‑selling campaigns based on anticipated clinical trial outcomes.

Legal Arguments and Requested Remedies

The FTC and the state co‑plaintiffs argue that these actions directly contravene the permanent injunction, which prohibits Shkreli from acquiring or holding an ownership interest in any pharmaceutical company or influencing its management. The filing asks the court to issue an order to show cause why Shkreli should not be held in civil contempt and to impose civil sanctions designed to force compliance. The sanctions sought include a requirement that Shkrei divest any pharmaceutical stock holdings, a fine equal to any profits earned from such trades (with prejudgment interest), and escalating penalties for future violations, potentially including additional financial penalties or incarceration.

Implications for Enforcement

The FTC’s Director of the Bureau of Competition, Daniel Guarnera, emphasized that the agency will not hesitate to enforce court orders and that the contempt action serves as a notice of that commitment. The filing notes that the FTC voted unanimously to pursue the contempt action, while FTC Chairman Andrew N. Ferguson is recused from the matter. Commissioner Mark R. Meador issued a statement supporting the filing.

The motion was submitted to the U.S. District Court for the Southern District of New York, where the original injunction was issued. If the court grants the contempt finding, it could set a precedent for strict enforcement of industry bans and signal heightened scrutiny of individuals who attempt to circumvent court‑ordered restrictions through public trading and commentary.

The case affects not only Shkreli but also the broader regulatory landscape, underscoring the FTC’s willingness to pursue aggressive enforcement actions to protect competition and prevent anticompetitive conduct in the pharmaceutical market.