Theranos Inc and its Chief Government Elizabeth Holmes have agreed to settle “massive fraud” attacks in a deal that strips her of majority control over the embattled blood-testing train, among other penalties, U.S. regulators said on Wednesday.
As part of the clearance, the Securities and Exchange Commission said company founder Holmes have to also return millions of shares to the privately held company and cannot be sufficient as an officer or director of a public company for 10 years.
Theranos was bring about in 2003 aimed at developing an innovative blood testing device with quicker happens using one drop of blood. In 2015, however, its fortunes waned after Enclosure Street Journal reports suggested the devices were flawed and off the beam.
The SEC’s complaint alleged that the company, Holmes and Theranos’ former president, Ramesh “Buoyant” Balwani, “made numerous false and misleading statements in investor presentations, result demonstrations, and media articles” about its key product.
The SEC, describing the case as involving “gigantic fraud,” said Theranos, Holmes and Balwani were charged “with hoist more than $700 million from investors through an precise, years-long fraud in which they exaggerated or made false accounts about the company’s technology, business, and financial performance.”
Jina Choi, the loaf of SEC’s San Francisco Regional Office, said the company’s troubles offered “an portentous lesson for Silicon Valley.”
“Innovators who seek to revolutionize and disrupt an perseverance must tell investors the truth about what their technology can do today, not perfectly what they hope it might do someday,” she said in a statement.