The short seller who’s driven Neoprobe (NYSE Amex:NEOP) investors crazy is coming under scrutiny from a public ethics group.
Citizens for Responsibility and Ethics in Washington (CREW) filed a Freedom of Information Act (FOIA) request that seeks to make public any communications between short seller Martin Shkreli, CEO of New York-based hedge fund MSMB Capital, and the U.S. Food and Drug Administration.
Anne Weismann, CREW’s chief counsel, said the FOIA request was part of a broader examination the group is undertaking to examine the extent to which Wall Street investors are influencing government policy and regulation to create profit for themselves. Short seller Steve Eisman has been accused of being “in bed” with the U.S. Department of Education as it sought to regulate for-profit colleges while Eisman was shorting shares of for-profit education companies.
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“We’re trying to find out to what extent this is going on in other industries,” Weismann said.
Weismann said CREW is aware of communications from Shkreli to the FDA regarding Dublin, Ohio-based cancer diagnostics company Neoprobe and another company, MannKind (NASDAQ:MNKD), a pharmaceuticals firm developing an inhaled form of insulin. “Whether that involved anything improper on his part, we don’t know,” she said.
Shkreli, who acknowledges he’s shorting Neoprobe’s stock, has drawn attention — and from Neoprobe’s retail investors, seething rebukes — recently for publicly advocating against the company.
He filed a citizen’s petition with the FDA in June, requesting that the agency deny Neoprobe’s request for a review of Lymphoseek due to what he views as flaws in the clinical trials of the drug candidate.
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The company’s stock has plummeted since Shkreli took his campaign against Neoprobe public, though he claims he didn’t cause the substantial decline. Neoprobe investors have charged that his public agitation was nothing more than a blatant attempt to enrich himself as he pushed the stock’s price down.
For his part, Shkreli said he has nothing to hide. “I’d be happy to reveal all communication I’ve ever had with FDA,” he said in an email. “FDA, like many other government agencies, is a transparent and friendly organization that likes input from its citizens and taxpayers.”
In addition to Neoprobe and MannKind, Shkreli said he’s communicated with the FDA about Arena Pharmaceuticals, which is developing a weight management drug called Lorcaserin.
“While it’s tempting to assign cause and effect, the truth is that these companies had poorly conducted studies, poorly conceived products, etc.,” he said. “Neoprobe is no different. I open my umbrella when it rains, but it doesn’t rain because I open my umbrella.”
