By Samantha Masunaga And Melody Petersen
Los Angeles Times
WWR Article Summary (tl;dr) On Wednesday, the embattled Newark, Calif., company and founder Elizabeth Holmes agreed to settle the SEC’s charges, stemming from what the agency called exaggerated or false statements about Theranos’ business, technology and financial performance.
Los Angeles Times
Four years ago, the Silicon Valley firm Theranos Inc. was valued at $9 billion and its founder and Chief Executive Elizabeth Holmes was hailed as a potentially revolutionary force in the blood-testing industry.
In fact, the U.S. Securities and Exchange Commission says now, the company that wowed a star-studded cast of investors and board members was conducting a “massive fraud” in which its proprietary technology never worked as advertised.
On Wednesday, the embattled Newark, Calif., company and Holmes agreed to settle the SEC’s charges, stemming from what the agency called exaggerated or false statements about Theranos’ business, technology and financial performance.
Holmes agreed to give up majority voting control over the company she founded in 2003 and will reduce her equity in Theranos, according to an SEC statement. She will pay a $500,000 penalty and return the remaining 18.9 million shares she obtained during the alleged fraud.
The settlements are still subject to court approval, and Theranos and Holmes, who remains CEO of the privately held company, did not admit or deny the allegations in the SEC complaint.
The SEC also charged Theranos’ former president, Ramesh “Sunny” Balwani in the case. The SEC said his case will be litigated in federal court in the Northern District of California.
“The company is pleased to be bringing this matter to a close and looks forward to advancing its technology,”
Theranos said in a statement on its website.
The agency’s complaint details an elaborate and years-long effort by Theranos, Holmes and Balwani to court investors, eventually raising more than $700 million, on a claim that the company had developed technology that could perform a multitude of comprehensive tests with just a few drops of blood from a patient’s finger.