Home Politics Theranos Founder Elizabeth Holmes Charged With Fraud By SEC

Theranos Founder Elizabeth Holmes Charged With Fraud By SEC

Elizabeth Holmes was just now charged by the SEC of fraud. As the leader of Theranos, a consumer healthcare technology company, she raised more than $700 million from investors over the course of several years by misrepresenting her company’s technology, business, and financial performance.

Holmes was charged by the SEC alongside former president Ramesh “Sunny” Balwani due to their misleading claims about the direction of the company and performance of their products.

An SEC press statement earlier today details the charges of fraud against Elizabeth Holmes, stating that “ made numerous false and misleading statements in investor presentations, product demonstrations, and media articles by which they deceived investors into believing that its key product – a portable blood analyzer – could conduct comprehensive blood tests from finger drops of blood, revolutionizing the blood testing industry. In truth, according to the SEC’s complaint, Theranos’ proprietary analyzer could complete only a small number of tests, and the company conducted the vast majority of patient tests on modified and industry-standard commercial analyzers manufactured by others.”

As the Theranos portable blood analyzer was the primary product that the company was using to turn a profit and attract investors, it’s no wonder that the SEC took issue with the misrepresentation involved in the development and explanation of their product.

Elizabeth Holmes also reported that the Theranos products were deployed by the US Department of Defense on the battlefield in Afghanistan and generated more than $100 million in revenue – a claim that turned out to be false, considering the analyzer generated just $100000 in revenue and was never deployed by the US Department of Defense.

“Investors are entitled to nothing less than complete truth and candor from companies and their executives,” said Steven Peikin, Co-Director of the SEC’s Enforcement Division. “The charges against Theranos, Holmes, and Balwani make clear that there is no exemption from the anti-fraud provisions of the federal securities laws simply because a company is non-public, development-stage, or the subject of exuberant media attention.”

The SEC reports that both Elizabeth Holmes and Ramesh Balwani will be working with the organization in order to resolve the charges. Elizabeth Holmes agreed to pay a $550000 penalty and will be barred from serving as a director or officer of a public company for 10 years.

“The Theranos story is an important lesson for Silicon Valley,” said Jina Choi, Director of the SEC’s San Francisco Regional Office. “Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday.”

Hopefully Elizabeth Holmes and the rest of Theranos learns from the mistake and will represent their business more truthfully moving forward.



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