‘Massive fraud’: disgraced Silicon Valley superstar Elizabeth Holmes loses control of blood-test firm Theranos in deal with SEC
Theranos was once valued at US$9 billion, but US regulators say founder Holmes misled investors and the media about its key product
Embattled blood-testing company Theranos Inc and its Chief Executive Elizabeth Holmes agreed to settle “massive fraud” charges in a deal that strips her of majority control among other penalties, US regulators said on Wednesday.
Theranos was once hailed as a Silicon Valley star, with a US$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 a 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 US$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.
