The SEC has charged fallen entrepreneurial star Elizabeth Holmes, founder of flameout Theranos (Private:THERA), and former President Ramesh Balwani with fraud. The regulator accuses the pair of making false and misleading statements to investors when raising over $700M to fund the development of blood testing technology that would "revolutionize" the clinical diagnostics industry. In reality, the portable analyzer could only perform a small number of assays so most of the test volume was performed on analyzers manufactured by other companies.
Theranos and Holmes have agreed to settle the charges. She has agreed to pay a $500K penalty, return the remaining 18.9M shares she accumulated during the fraud, relinquish her voting control of the company and be barred from serving as an officer or director of a public company for 10 years.
The SEC will litigate its claims against Mr. Balwani in a northern California district court.
Previously: Arizona AG to sue Theranos for defrauding consumers (Jan. 12, 2017)
Previously: Theranos sued over 'series of lies' (Oct. 11, 2016)
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