Fed­s' case spot­lights Shkre­li’s dis­as­trous biotech short -- which forced him to launch Retrophin

A bad bet short­ing Orex­i­gen Ther­a­peu­tics’ stock back in 2011 tor­pe­doed Mar­tin Shkre­li’s hedge fund, ac­cord­ing to a for­mer staffer tes­ti­fy­ing in the Shkre­li fraud tri­al in New York this week. But it al­so led Shkre­li to launch Retrophin, which pros­e­cu­tors say the out­spo­ken ex­ec went on to use as his own per­son­al pig­gy bank to pay back in­vestors in the fund.

CN­BC’s cov­er­age of the tri­al spot­light­ed the bad bet, which left Shkre­li’s fund ow­ing $10 mil­lion to Bank of Amer­i­ca/Mer­rill Lynch, far more than the fund had. But in­stead of telling his in­vestors that he had lost all their mon­ey, he in­sist­ed that the fund was fat with cash. Then he pro­ceed­ed to stall any pay­outs for years as the in­vestors grew in­creas­ing­ly an­gry and im­pa­tient, ac­cord­ing to tes­ti­mo­ny.

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