WASHINGTON: Embattled blood-testing company Theranos Inc and its Chief Executive Elizabeth Holmes (pictured) agreed to settle “massive fraud” charges in a deal that strips her of majority control among other penalties, US regulators said.
Theranos was once hailed as a Silicon Valley star, with a $9 billion valuation based on its promise to disrupt the staid laboratory testing business with new technology the company claimed could analyse a single drop of blood. Founded in 2003, its fortunes began to wane in 2015 after Wall Street Journal reports suggested its devices were flawed and inaccurate. As part of the settlement, the Securities and Exchange Commission said company founder Holmes must also return millions of shares to the privately held company, pay a $500,000 fine and cannot serve as an officer or director of a public company for 10 years.
The SEC’s complaint alleged that the company, Holmes and Theranos’ former president, Ramesh “Sunny” Balwani, “made numerous false and misleading statements in investor presentations, product demonstrations, and media articles” about its key product. Theranos raised more than $750 million from investors including well-known venture capital firm DFJ, Walgreens, media mogul Rupert Murdoch and Oracle co-founder Larry Ellison. Many investors have already sold their stakes.
The SEC, describing the case as involving “massive fraud,” said Theranos, Holmes and Balwani were charged “with raising more than $700 million from investors through an elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business and financial performance.” — Reuters
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