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SEC Charges Theranos, CEO Elizabeth Holmes With 'Massive Fraud' (engadget.com)
An anonymous reader quotes a report from Engadget: The SEC has charged Theranos, Elizabeth Holmes and Ramesh "Sunny" Balwani with fraud relating to the startup's fundraising activities. The company, as well as CEO Holmes and former president Balwani are said to have raised more than $700 million from investors through "an elaborate, years-long fraud." This involved making "false statements about the company's technology, business and financial performance." In a statement, the commission said that the company, and its two executives, misled investors about the capability of its blood testing technology. Theranos' big selling point was that its hardware could scan for a number of diseases with just a small drop of blood. Unfortunately, the company was never able to demonstrate that its system worked as well as its creators claimed.
The company and Elizabeth Holmes have already agreed to settle the charges leveled against them by the SEC. Holmes will have to pay a $500,000 fine and return 18.9 million shares in Theranos that she owned, as well as downgrading her super-majority equity into common stock. The CEO is now barred from serving as the officer or director of a public company for 10 years. In addition, if Theranos is liquidated or acquired, Holmes cannot profit from her remaining shareholding unless $750 million is handed back to defrauded investors. Balwani, on the other hand, is facing a federal court case in the Northern District of California where the SEC will litigate its claims against him. Worth noting: the court still has to approve the deals between Holmes and Theranos, and neither party has admitted any wrongdoing.
The company and Elizabeth Holmes have already agreed to settle the charges leveled against them by the SEC. Holmes will have to pay a $500,000 fine and return 18.9 million shares in Theranos that she owned, as well as downgrading her super-majority equity into common stock. The CEO is now barred from serving as the officer or director of a public company for 10 years. In addition, if Theranos is liquidated or acquired, Holmes cannot profit from her remaining shareholding unless $750 million is handed back to defrauded investors. Balwani, on the other hand, is facing a federal court case in the Northern District of California where the SEC will litigate its claims against him. Worth noting: the court still has to approve the deals between Holmes and Theranos, and neither party has admitted any wrongdoing.
So nice to see some accountability for these people. I also saw this today:
https://www.justice.gov/usao-n...
Oh, now they tell us.
Faster! Faster! Faster would be better!
Why does she get off with just paying a fine if she committed "massive fraud"? Shouldn't there be a little jail time involved, too? I'm not saying she's gotta do life, but maybe five years and then community service.
People get harsher sentences for selling half a pound of weed.
You are welcome on my lawn.
She raised $700m from investors but is only penalized $500k? I wonder what her net-worth is now? Probably still paid her self a ton during her tenure....
That's for serious offenders, not massive fraud.
captcha: angriest
Beautiful, young, dressed in black (or white hospital smock), unsmiling, with a Stanford degree and a whole bunch of endorsements from SV types. Talks about the intersection between biology, technology and consumerism. A perfect setup.
Steal a loaf of bread and you in jail for up to a year on a misdemeanor charge and canâ(TM)t ever get a decent job thanks to background checks.
But if you swindle $700 million, pay a small fine, write a book, work as an industry consultant, live large.
Not true. Pump-and-dump stock scams are a dime a dozen. There are probably 500 going on right now. The problem is the SEC does not have the manpower. They have maybe 300 lawyers on staff to monitor something like 25,000 publicly-traded stocks.
In fact, it is very rare for executives to go to jail, no matter how egregious, no matter how much they knew.
In this case, she is the "visionary" with no college degree and no world experience. Her lawyers can plausibly argue she was hands off and relied on experts for the important details.
I am not suggesting she should not be punished -- I am for it. But her case is unusual in a number of respects. Worrying over specifics about gonads is premature.
Yo, Muskâ(TM)s stuff works. Maybe delayed by double his estimate, but it works.
$700MM is a huge number. Bernie Madoff was probably 10 to 20 times that.
That would result in much more. I wonder what rich person she pissed of that they even went after her.
Don't fight for your country, if your country does not fight for you.
and the performing a chemistry...
I am shocked that someone who wears a black turtleneck and outputs not-quite-sensible technobabble could be guilty of defrauding people of money. It just can't happen, I tells ya!
They should charge her with having googly eyes too
I consider this a legal fiction.
See, if I've done nothing wrong, I'm not giving you $750 million.
The only way you sell your stock and give someone else the first three quarters of a billion fucking dollars is if you know you did it, everyone else knows you did it, but for bullshit legal reasons you're still getting to pretend you didn't do it.
CEOs are crooks. CEOs of startups are full on con-artists, which these guys clearly were.
This kind of shit really needs to be made into a felony so these assholes spend time in actual prison. Not rich white people's prison. The same prison everyone else goes to.
If I steal a candy bar, I don't get to hand back the candy bar and not admit wrong doing. My dumb cracker ass goes to real, honest-to-goodness prison.
Why hasn't her wikipedia been updated? It still says she's a visionary and businesswoman who is simply having a small misunderstanding with government.
Of course we all know why.
. . .needs roommates.
Um, you missed the bit where all of Musk's stuff actually WORKS, like electric cars actually being out on the road and rockets that actually launch payloads and land again.
The Theranos majik blood tricorder never worked. Hence the fraud.
But we get it, you hate Elon Musk.
Small selection of other newsworthy events on CNN's homepage:
TV reporter's viral eye roll causes trouble
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Top MLB star won't even make $1 million this year
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CRTL+F Holmes : 0 results?
CRTL+F Theranos : 0 results?
Again, I will just state that the reason we (maybe secretly) take so much satisfaction / schadenfreude at this story is that someone who was so hyped and the darling of Silicon Valley got so much funding and attention. While others who toil away on good ideas, without nearly so many connections and silver spoons, struggle to even get 1 minute of air time with the kind of funders and backers that she got.
Separately, I hope that they absolutely nail and jail Sunny Balwani, who threatened and intimidated whistleblowing employees with their careers for exposing the massive fraud that Theranos was.
Finally, we should be thankful that the SEC and agencies like DHHS and CMMS actually still have some teeth and reputability to follow through on issues like this and have not been totally gutted. Imagine 100 years ago when hucksters like this were touting every fake medicine under the sun and people were actually grateful for public-serving regulation. The order from CMMS to Theranos actually essentially said, "You are in immediate jeopardy of violating the law and must provide proof that you're reversing the harm caused by your inaccurate / fraudulent medical test results. Simply closing your lab will not remove this jeopardy." Thank god for rules.
The SEC is full of Democrat party shill people. Whole agency must be disbanded for true freedom to return to this country.
And got nearly a decade, all his assets taken, no chance of profit, etc - and he had already paid everyone back (plus he gave away the meds to anyone who couldn't afford them for the original "scandal" that made him famous.) Holmes and her entire family should be executed if held to a similar standard.
Every time this fraudster was mentioned on here I kept asking why anyone believed her, why anyone kept giving her money and why she wasn't in jail.
It was obvious from the beginning this was nothing but a scam. She never showed her results, never allowed anyone to replicate her results, and never submitted her blood test to the FDA for testing.
If those aren't red flags, nothing is.
We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
Those white men wanting to keep a woman down.
This is wrong, and dumb, and you are dumber for having said it
Looks like some progress on the equality front - now we got large-type women frauds too. ... I'm not even joking.
We suffer more in our imagination than in reality. - Seneca
What did she benefit from feminism, anyway? Some parroting of a narrative of "go-getter woman"? Subsequently falsified, or the stereotype recast to include fraud. Was this the thing that got her the big bux? Cos I'm sure the kind of public image she'd get with that narrative is lesser to those that're available with sheer dosh, along the lines of lazy journalism and/or friends in a small handful of (self-described) progressive media.
Meh to that. To hear some of these MRA types say it, feminism was supposed to be an all-powerful, reality-bending exercise in coordinated horseshit. But it'll be a fun barb for when someone repeats the same narrative again: is she a fraudster, like wosserface back in the 2010s...
Sure. Of Course. It just business as usual i.e. doing wrong, i.e. bottom line, i.e. extreme self interest without any regard to anybody or anything but your own profit.
Fucking splendid.
Liar is Jew talk for I'm too lazy to verify your claims
The capitalist pig investors should have at least tried to verify her claims.
The investors gambled on her success and loss. Instead of taking responsibility for their loss, they've chosen to blame anyone but themselves.
They were obviously looking for a quick return on their monetary investment.
Blood testing isn't very valuable anyhow. Proper breeding and eugenics are the right way to improve genetics, not trying to fix broken people.
she's the God daughter or something of somebody wealthy. She's just a well connected moderately attractive little rich girl being allowed to waste friends & family's money. Ordinarily that by itself would just be annoying, but by all accounts her company ran phony blood tests that caused real harm. I'm with other's on this thread: Criminal Negligence FTW.
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The part that annoys me int he article was where it described her as a "Steve Jobs wannabe wunderkind". WTF with the wunderkind crap? Steven Hawkings, God rest his soul, was a wunderkind. These a-holes in Silicon valley are not. What was the last original idea that any of these so called tech titans in Silicon Valley came up with? Most are like Gates or Zuckerberg who the took someone else's idea and called it their own.
She's basically Jack Black's character from Envy, except not as successful.
Cheap storage VM.
lul wut? 700MM is only about 25.5 inches. Not a huge number at all...