Elizabeth Holmes, the founder of American start-up Theranos that promised to revolutionize blood testing, has agreed to settle charges that she raised over $700 million fraudulently.
According to the Securities and Exchange Commission (SEC) said Elizabeth Holmes and Theranos deceived investors about the company’s technology.
The financial regulator also said the company had falsely claimed its products had been used by the US army in Afghanistan.
Elizabeth Holmes will lose control of the company and be fined $500,000.
An SEC official called the fallout an “important lesson for Silicon Valley”.
Jina Choi, director of the SEC’s San Francisco regional office, said: “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.”
The company was founded in 2003 when Elizabeth Holmes was only 19, and sought to develop an innovative blood testing device.
Theranos said its Edison device could test for conditions such as cancer and cholesterol with only a few drops of blood from a finger-prick, rather than taking vials from a vein.
In 2015, Forbes magazine estimated Elizabeth Holmes’ wealth at $4.5 billion.
However, in the same year reports in the Wall Street Journal suggested the devices were flawed and inaccurate.
By 2016 Forbes magazine had revised its estimates of Elizabeth Holmes’ fortune to “nothing”.
The charges were brought against the company and its former president Ramesh “Sunny” Balwani as well as Elizabeth Holmes.
The SEC plans to bring a case against Sunny Balwani.
The agency alleged that Theranos, Elizabeth Holmes and Sunny Balwani made a series of false and misleading statements in investor presentations, product demonstrations and interviews, saying: “Theranos, Holmes, and Balwani claimed that Theranos’ products were deployed by the US Department of Defence on the battlefield in Afghanistan and on medevac helicopters and that the company would generate more than $100m in revenue in 2014.
“In truth, Theranos’ technology was never deployed by the US Department of Defense and generated a little more than $100,000 in revenue from operations in 2014…
“In truth, according to the SEC’s complaint, Theranos’ proprietary analyzer could complete only a small number of tests, and the company conducted the vast majority of patient tests on modified and industry-standard commercial analyzers manufactured by others.”
Credit Suisse and Barclays have been fined a total of $154 million over their “dark pool” trading operations in the US.
“Dark pool” operations allow investors to trade large blocks of shares but keep the prices private.
Barclays has admitted misleading investors and violating securities law in the way it operated the pool. The bank will pay a $70 million fine.
Credit Suisse will pay $60 million and another $24.3 million relating to other violations.
The fines will be split between the State of New York and the Securities and Exchange Commission (SEC).
The New York Attorney General and the SEC have both censured the two banks for their misconduct.
New York Attorney General Eric Schneiderman said: “These cases mark the first major victory in the fight against fraud in dark pool trading that began when we first sued Barclays.”
He added that “co-ordinated and aggressive government action” had led to “admissions of wrongdoing, and meaningful reforms to protect investors from predatory, high-frequency traders”.
“We will continue to take the fight to those who aim to rig the system and those who look the other way,” Eric Schneiderman said.
Andrew Ceresney, director of the SEC’s enforcement division said: “Dark pools have a significant role in today’s equity marketplace, and the firms that run these venues must ensure that they do not make mis-statements to subscribers about their material operations.”
Credit Suisse will neither admit nor deny the allegations.
A spokeswoman said the bank was “pleased to have resolved these matters” with the SEC and the New York attorney general.
A Barclays representative said: “The agreement will enable us to focus all of our efforts on serving our clients.”
In 2015, Barclays lost an attempt to have the case dismissed.
Part of the point of dark pool trading systems is to allow institutions to sell large numbers of shares privately, helping to make sure their actions don’t result in a cut in the price they can get.
Trading in CYNK Technology has been suspended by the US Securities and Exchanges Commission (SEC) after shares in the little-known social networking company surged more than 23,000% in the past month.
Documents showed the company – which is registered in Nevada with an office in Belize City, Belize – had no revenue and one employee.
Shares in CYNK jumped from 6 cents in early June to $13.90 on July 10, despite uncertainty about its business and revenue structure
Shares in CYNK were traded in a lightly regulated “over the counter” exchange.
The SEC halted trading until July 24.
“It appears to the SEC that the public interest and the protection of investors require a suspension of trading in the securities of CYNK Technology Corp (“CYNK”) because of concerns regarding the accuracy and adequacy of information in the marketplace and potentially manipulative transactions in CYNK’s common stock,” wrote the SEC in its order suspending trading in the company.
On July 11, another US regulator – the Financial Industry Regulation Authority (FINRA) – had halted trading in CYNK under its “extraordinary event halt” code.
Shares in CYNK jumped from 6 cents in early June to $13.90 on July 10, despite uncertainty about its business and revenue structure. That values places the company at a valuation of close to $4 billion – just slightly above the valuation of airline JetBlue.
CYNK billed itself as a “development stage” company and its main website – introbiz.com – is described as a marketplace where one “may both buy and sell the ability to socially connect to individuals such as celebrities, business owners, and talented IT professionals”.