The US Securities and Exchange Commission yesterday charged Elizabeth Holmes, the founder and CEO of Theranos, and Ramesh Balwani, its former president, with fraud, as 360Dx reports. The SEC alleges that Holmes and Balwani raised more than $700 million from investors by exaggerating or lying about the capabilities of the company's technology.
Both Theranos and Holmes have reached a settlement with the SEC, 360Dx adds. Holmes has agreed to pay a $500,000 fine and give up her remaining 18.9 million shares of Theranos stock. She is also banned from acting as an officer or director of a publicly traded company for 10 years. Neither she nor Theranos has admitted to or denied the SEC's allegations, the agency notes.
In a statement, Theranos says it and Holmes "fully cooperated with the SEC throughout its investigation."
Questions arose about Theranos' technology — which purported to be able to use just a finger prick's worth of blood to run numerous clinical tests — following a series of Wall Street Journal articles. In October 2015, the Journal reported that the firm rarely used its own technology in testing and that there were a number of irregularities in the firm's proficiency testing. The Centers for Medicare & Medicaid Service then sent the firm a letter in January 2016 after its inspection found deficiencies in its lab practices. CMS later, in July 2016, barred Holmes from running a clinical lab for two years. The firm also voided and corrected thousands of lab tests. At the same time, the SEC and other agencies began their own investigations into the firm.
At one point, Theranos was estimated to be worth $9 billion, 360Dx notes.