Theranos Founder Charged With Massive Fraud by SEC
Elizabeth Holmes, founder and chief executive of scandal-ridden blood-testing startup Theranos, Inc., has been formally charged with fraud by the U.S. Securities and Exchange Commission (SEC) alongside the company’s former president, Ramesh “Sunny” Balwani, for their role in fleecing investors of more than US$ 700 million using grossly exaggerated claims about the efficacy and business potential of their core product. Theranos and Holmes have agreed to settle the charges levied against them in court, with Holmes agreeing to pay US$ 500,000 in penalties, according to an announcement from the commission.
As part of the settlement, Holmes has forfeited her shares and voting control of Theranos and been barred from serving as an officer or director of a public company for the next 10 years. No such agreement was made with Balwani, who will face the SEC’s lawyers in federal district court in the Northern District Court of California. The charges come nearly two years after the SEC first began its investigation into Theranos, following an explosive report published by The Wall Street Journal in October 2015 quoting former employees that claimed the company’s revolutionary blood-testing equipment was built on a sham.
Big Dreams
A Stanford dropout whose penchant for black turtlenecks and promising technological marvels once drew comparisons to Silicon Valley deity Steve Jobs, Holmes captivated investors in 2003 with her pitch to develop a portable blood analyzer that could run a comprehensive suite of tests using only a few drops of blood, and at a fraction of the cost of devices currently on the market. In truth, however, Theranos’ mythical proprietary technology – dubbed the Edison machine after the prolific inventor – turned out to be capable of only a small fraction of what was promised, with the vast majority of tests being ran on traditional machines manufactured by companies like Siemens.
Attracting Big Names
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The Chan Zuckerberg Initiative (CZI) hired its first chief investment officer. The US$ 10 billion philanthropic vehicle hired David Lee to be its CIO. The search process was conducted by New York-based recruiting firm David Barrett Partners. Lee spent the last eight years working at Princeton University’s endowment – holding the managing director position as his final station. Lee got his MBA at Yale University.
According to the CZI press release, “In this role, Lee will be responsible for managing an investment portfolio that will grow the organization’s ability to fund its efforts across its three core Initiatives – Science, Education and Justice & Opportunity. CZI is a new kind of philanthropic organization that pairs engineering with grantmaking, impact investing, policy and advocacy work, in order to help build a more inclusive, just, and healthy future for everyone.”
Lee will report to an investment committee which is led by Yale University CIO David Swensen. Other investment committee members of CZI include Lei Zhang, Founder and CEO of Hillhouse Capital; Matt Cohler, General Partner of venture capital firm Benchmark; and Carter Simonds, a former Managing Director of Blue Ridge Capital – a hedge fund investor.
Photo Credit: CZI
On December 14, 2018, Pakistan received its second installment of the US$ 3 billion in aid promised from Saudi Arabia on October 23, 2018. The US$ 1 billion given on December 14th boosted the foreign reserves of the State Bank of Pakistan, which went from US$ 7.2 billion to US$ 8.2 billion. The first installment was given on November 23, 2018. The last installment is expected to occur in January 2019.
The White House announced Heath P. Tarbert will be nominated to serve as Commissioner and Chairman of the Commodity Futures Trading Commission (CFTC). Tarbert currently serves as Assistant Secretary for International Markets at the U.S. Treasury Department. Before joining the U.S. Treasury, Tarbert was a Partner at law firm Allen & Overy. Tarbert was confirmed by the U.S. Senate for his current Treasury post at 87 (yes) to 8 (no).
Upon Senate confirmation, Tarbert’s CFTC term would start on April 14, 2019 and last for five years. Tarbert is taking over from J. Christopher Giancarlo whose term ends in April 2019. Tarbert will need a U.S. Senate confirmation to take the head CFTC post.
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