Martin Shkreli, a lightning rod for growing outrage over soaring prescription drug prices, was arrested by the FBI on Thursday after a federal investigation involving his former hedge fund and a pharmaceutical company he previously headed.
The securities fraud probe of Shkreli, who is now chief executive officer of Turing Pharmaceuticals and KaloBios Pharmaceuticals Inc, stems from his time as manager of hedge fund MSMB Capital Management and CEO of biopharmaceutical company Retrophin Inc, a person familiar with the matter said.
Shares of KaloBios fell about 50 percent in premarket trading.
Lawyers for Retrophin and Shkreli, whose arrest was witnessed by Reuters, did not immediately respond to a request for comment. Turing and KaloBios declined to comment.
Turing sparked controversy earlier this year after news reports that it had raised the price of Daraprim, a 62-year-old treatment for a dangerous parasitic infection, to $750 a tablet from $13.50 after acquiring it.
Shkreli, 32, was expected to be charged on Thursday for illegally using Retrophin assets to pay off debts after MSMB lost millions of dollars, the source said.
The probe, by federal prosecutors in Brooklyn, dates back to at least January when Retrophin said it received a subpoena from prosecutors seeking information about its relationship with Shkreli.
That subpoena also sought information about individuals or entities that had invested in funds previously managed by Shkreli, Retrophin said in a regulatory filing.