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The SEC hits Theranos CEO Elizabeth Holmes with ‘massive’ fraud charge

Elizabeth Holmes, the founder and CEO of the beleaguered blood-testing startup Theranos, has been charged with “massive [years-long] fraud” by the Securities and Exchange Commission. According to the SEC, Holmes and former company president Ramesh Balwani allegedly “deceived investors into...


March 15, 2018

Elizabeth Holmes, the founder and CEO of the beleaguered blood-testing startup Theranos, has been charged with “massive [years-long] fraud” by the Securities and Exchange Commission.

According to the SEC, Holmes and former company president Ramesh Balwani allegedly “deceived investors into believing that its key product — a portable blood analyzer — could conduct comprehensive tests from finger drops of blood.”

Everyone loves a good story

It’s the stuff that makes Hollywood swoon (literally): The company once valued at $9B was founded by a bold college dropout with a fear of needles and a desire to change the world.

Holmes’ comeuppance, along with the company’s, was widely publicized; some even compared her innovative spirit (and her ability to wear a black turtleneck) to that of Steve Jobs.

But from the get-go, medical experts questioned the mystique of Theranos’ technology, and that smoke eventually turned to fire when The Wall Street Journal reported the technology was only being used in a fraction of the 240 tests they advertised.

Still falling from grace

The SEC alleges that Holmes, Balwani and Theranos raised more than $700m from investors by fudging the capabilities of the technology, their financial status, and exaggerating their relationship with the Department of Defense. 

As for Holmes: She agreed to a $500k penalty, the relinquishment of 19m shares and voting control of Theranos, and was banned from serving as an officer or director of a public company for the next decade.

Sounds rough, but hey, we hear the gig economy’s really heating up these days… 

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