Theranos’ CEO Elizabeth Holmes Charged By SEC With “Massive Fraud”
by Tyler Durden
ZeroHedge.com
Wed, 03/14/2018
A little over two years after Theranos was exposed as a fraud by the WSJ, and not that much longer after its CEO Elizabeth Holmes was prancing around with Bill Clinton on the stage of the Clinton Global Initiative…
… the SEC finally woke up, and moments ago it announced that it has charged Elizabeth Holmes as well as Theranos’ former president Ramesh Balwani with “massive fraud” for raising $700M+ “through an elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance.”
The SEC announced that as part of a settlement, Theranos and Holmes have agreed to resolve the charges against them, and “in addition to a penalty, Holmes has agreed to give up majority voting control over the company, as well as to a reduction of her equity which, combined with shares she previously returned, materially reduces her equity stake.”
“As a result of Holmes’ alleged fraudulent conduct, she is being stripped of control of the company she founded, is returning millions of shares to Theranos, and is barred from serving as an officer or director of a public company for 10 years,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division. “This package of remedies exemplifies our efforts to impose tailored and meaningful sanctions that directly address the unlawful behavior charged and best remedies the harm done to shareholders.”
But before you think that justice is finally being done, here is the actual “fine”: $500.000.
Theranos and Holmes have agreed to settle the fraud charges levied against them. Holmes agreed to pay a $500,000 penalty, be barred from serving as an officer or director of a public company for 10 years, return the remaining 18.9 million shares that she obtained during the fraud, and relinquish her voting control of Theranos by converting her super-majority Theranos Class B Common shares to Class A Common shares. Due to the company’s liquidation preference, if Theranos is acquired or is otherwise liquidated, Holmes would not profit from her ownership until – assuming redemption of certain warrants – over $750 million is returned to defrauded investors and other preferred shareholders. The settlements with Theranos and Holmes are subject to court approval. Theranos and Holmes neither admitted nor denied the allegations in the SEC’s complaint. The SEC will litigate its claims against Balwani in federal district court in the Northern District of California.
The Rest…HERE
