The SEC also said Theranos deceived investors by “hosting misleading technology demonstrations, and overstating the extent of Theranos’ relationships with commercial partners,” noting that at times Theranos’ technology performed could only do about 12 tests of the over 200 tests advertised. The SEC also named former Theranos president Ramesh “Sunny” Balwani in its allegations, saying that Holmes and Balwani lied about the extent of Thernos’ involvement with the military.
Theranos was once considered a high-flying start-up, and Holmes graced major magazine covers, touted as the personification of innovation.
But Wall Street Journal investigations over the past five years questioned the efficacy of Theranos’ blood testing technology, raising flags for regulators. But Theranos has now resolved proceedings with the Centers for Medicare & Medicaid Services, as well as the Arizona Attorney General.
Theranos previously settled a lawsuit with one of its biggest investors, Partner Fund Management, which invested more than $96 million in Theranos in 2014. Holmes has already said she plans to give away shares to the “most significant shareholders.”
“The Theranos story is an important lesson for Silicon Valley,” Jina Choi, Director of the SEC’s San Francisco regional office, said in a statement. ”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.”
Here’s the full complaint against Holmes.