>> Theranos, and it's founder, once a Silicon Valley darling, who set out to shake up the blood testing industry with the prick of a finger, have agreed to settle quote, massive fraud charges. The Securities and Exchange Commissions saying Wednesday, that as part of the settlement, founder Elizabeth Holmes is being stripped of control of Theranos, must return millions of shares to the privately held company, pay a half a million dollar fine, and will be banned from serving as an officer or director of a public company for ten years.
It's a stunning fall for the 34 year old drop out from Stanford University, one of the few well known female tech company founders. She was often compared to Steve Jobs, and dressed for the role in her signature black turtleneck. Her company, once valued at $9 billion, making her one of the youngest self-made billionaires before her reputation was ruined, following a Wall Street Journal report in 2015, that suggested Theranos devices were flawed and inaccurate.
Reuters Pete Schroder was on the call with the SEC.>> The SEC sent a loud message to Silicon Valley today, with the enforcement action against Theranos effectively saying that a startup, no matter how high profile or the amount of capital venture funding it attracts, needs to be able to deliver on the promises it makes to its investors.
The fine against Elizabeth Holmes, who founded the company, and the move to effectively strip her of control of that company is fairly unprecedented for the regulator. And it's clear that the SEC wants to make sure that their oversight of Theranos was well noted, and that other firms will be thinking twice about how they go forward from here.
>> The SEC's complaint alleges Holmes made numerous false and misleading statements in investor presentations, product demonstrations, and media articles. No word yet on whether the SEC settlement will be followed by criminal charges.