Years after it was reported that the SEC was looking into improprieties at the once high-flying blood-testing company Theranos, its founder, Elizabeth Holmes, and the company’s former president, Ramesh “Sunny” Balwani,” have been formerly charged with massive fraud by the agency.
The charge, more precisely: that the two raised more than $700 million from investors through an “elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance.”
Theranos and Holmes have agreed to resolve the charges against them, says the SEC, though neither admitted nor denied the allegations in the SEC’s complaint.
For her part, Holmes has 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. This way, if Theranos is acquired or is otherwise liquidated, Holmes won’t profit until more than $750 million is first returned to Theranos’s shareholders.
As for Balwani, the SEC says it will litigate its claims against him in federal district court in the Northern District of California.
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