And corporate criminals don’t come any whiter than Elizabeth Holmes:
Elizabeth Holmes, the founder of blood testing startup Theranos, has been charged with engaging in a “massive fraud” by the Securities and Exchange Commission. The SEC says she and the company’s president raised more than $700 million using an “elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance.”
No, she won’t be going to jail over this. In fact, even though she faces some serious penalties over the charge — she’s losing control of the company and won’t profit if it is sold — she also doesn’t have to admit wrongdoing as part of a settlement with regulators.
To recap, Theranos was once a Silicon Valley favorite because of its promise that its technology could allow for a wide variety of blood tests with just a droplet of blood. That all began to fall apart when the Wall Street Journal raised serious questions about the accuracy of the tests, prompting a government agency to shut down one of its labs.
Here’s are some of the things Holmes has agreed to do to settle with the SEC.
She’ll give up financial and voting control of the company.
- Holmes has to pay a $500,000 fine.
- She cannot be a director or officer of a publicly traded company for 10 years. Theranos is a privately-held company, which means she can continue to be CEO.
- She has to return 18.9 million shares of Theranos stock.
- She will give up her majority voting control of the company by converting her shares to Class A Common shares from Class B Common share
She should be in jail, and she should be banned from managing publicly traded companies for life, but she does not even have to admit liability.
Well, I suppose she’s commiserating with David Petraeus about how unfair this all is.