Article: How Martin Shkreli Allegedly Created a ‘Ponzi Scheme’ With Biotech Stocks

How Martin Shkreli Allegedly Created a ‘Ponzi Scheme’ With Biotech Stocks

Jen Wieczner

Fortune, 17 December 2015

After racking up losses while running hedge fund firm MSMB Capital Management, which made bets against biotech stocks, Shkreli formed a biotech company of his own called Retrophin (RTRX) in 2011. He effectively used the company as his own personal piggybank to pay back his and the MSMB funds’ debts, according to the charges brought by the FBI and a separate SEC complaint.

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Comment: Now this story shows you how this thug gained the system was caught and it was not a big story HE SOLD Naked short 32,000,000 shares and they system didn’t even stop him. Just read how he sold 32 Million shares of stock naked short and Merrill let him Just try and sell 1 share of stock if its not in your account , Anyway Merrill had to be in bed with him to allow this to happen. Only when he walked away from trade did Merrill make a stink THIS shows you how a low level thug has gained the system and the bigger question is WHO taught him?

The original downfall of the funds came down to one stock, according to the indictment: Orexigen Therapeutics (OREX, +0.00%). To short biotech stocks, Shkreli would have had to borrow shares in biotech companies, sell them, and ideally buy them back and return them at a lower price in order to pocket the difference. What he supposedly did wrong: The indictment says that in 2011, Shkreli sold short 32 million shares of Orexigen—but he never actually borrowed all of them. The MSMB fund “failed to locate” the rest of the shares it owed, taking a loss of more than $7 million.