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Blood, Fraud and Money Led to Theranos CEO's Fall From Grace


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  • SEC accuses Holmes of years of lying to startup’s investors
  • Holmes will pay $500,000 penalty, give up control of company

 

Elizabeth Holmes raised hundreds of millions of dollars from investors on the promise that her medical-testing startup Theranos Inc. would change medicine with a single drop of blood. On Wednesday, securities regulators called her a fraud and forced her to give up the company she built.

 

The lawsuit and settlement announced Wednesday by the U.S. Securities and Exchange Commission detailed how Holmes and her chief deputy lied for years about their technology, snookered the media, and used the publicity to get investors to hand more than $700 million to keep the closely held company afloat.

 
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Elizabeth Holmes

Photographer: David Paul Morris/Bloomberg

As part of the accord, Holmes will pay a $500,000 fine, surrender 19 million shares and is barred from being an officer or director of a public company for 10 years.

 

The settlement leaves unanswered whether federal prosecutors will pursue criminal charges. Theranos was under scrutiny by Justice Department prosecutors in San Francisco, but the status of any probe is unclear. Abraham Simmons, a spokesman for the U.S. Attorney’s office in San Francisco, declined to comment.

 

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