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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.
The SEC can only levy civil penalties (fines), not criminal (jail). The DOJ will have to get involved and charge her criminally before she sees jail.
In fact, Theranos had a big song and dance about being too awesome to cough up lab data or peer reviewed papers, as is normal in this business space. A lot of companies looked at Theranos and most of them refused to consider writing checks, for this very reason.
The people who wrote the checks bought into the "visionary thing", and did not follow standard business practices in the pharma and diagnostics medical space. I feel no pity for them, even if I believe Holmes should face consequences.
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....
It's in TFS, for crying out loud:
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.
If it weren't for deadlines, nothing would be late.
Wish I could mod you up..
Forbes has downgraded her net worth from $4.5 billion to $0. This settlement basically ruins here. Probably prevents here from "failing upward" too, which is good.
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....
It's in TFS, for crying out loud:
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.
OK fuckwit, now how about you READ what the parent stated, which was asking about her salary was during her tenure, which has fuck all to do with any of her punishment other than a $500K fine, which is likely pocket change to her. The company was founded in 2004, and prior to this fraud discovery was valued at over 9 billion. Anything from a $10 to 100 million dollar annual salary for a CEO would not be outlandish, which would leave her with a significant amount of personal wealth that is NOT forfeit.
In other words, when the dust settles, this "punishment" likely won't be one, and she'll buy her way out of jail.
what about the investors do some due diligence and not throw money at a worthless company.
FOMO. If you don't jump on the opportunity, someone else will.
TBH I didnt RTFA
Then you missed the best part: They are going to make a movie about Theranos, with Jennifer Lawrence starring as Ms Holmes!
did they falsify data, or just make large false claims?
Mostly just lying, exaggerating, and hand-waving. Liz almost certainly started out believing the technology would work. Then schedules slipped, so she told a few fibs to buy time to fix the kinks. But then the schedule slipped some more, so she made the lies a little bigger. The it became clear that there were major problems, and she faced a choice: Either come clean and give up her status as a feted young billionaire on mission to save the world, or ... keep digging deeper. Given that choice, what would you do?