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ELIZABETH HOLMES and THERANOS, INC charged with fraud

https://www.sec.gov/litigation/complaints/2018/comp-pr2018-41-theranos-holmes.pdf

2. Holmes, Balwani, and Theranos raised more than $700 million from late 2013 to 2015 while deceiving investors by making it appear as if Theranos had successfully developed a commercially-ready portable blood analyzer that could perform a full range of laboratory tests from a small sample of blood. They deceived investors by, among other things, making false and misleading statements to the media, hosting misleading technology demonstrations, and overstating the extent of Theranos’ relationships with commercial partners and government entities, to whom they had also made misrepresentations.

3. Holmes, Balwani, and Theranos also made false or misleading statements to investors about many aspects of Theranos’ business, including the capabilities of its proprietary analyzers, its commercial relationships, its relationship with the Department of Defense (“DOD”), its regulatory status with the U.S. Food and Drug Administration (“FDA”), and its financial condition. These statements were made with the intent to deceive or with reckless disregard for the truth.

4. Investors believed, based on these representations, that Theranos had successfully developed a proprietary analyzer that was capable of conducting a comprehensive set of blood tests from a few drops of blood from a finger. From Holmes’ and Balwani’s representations, investors understood Theranos offered a suite of technologies to (1) collect and transport a fingerstick sample of blood, (2) place the sample on a special cartridge which could be inserted into (3) Theranos’ proprietary analyzer, which would generate the results that Theranos could transmit to the patient or care provider. According to Holmes and Balwani, Theranos’ technology could provide blood testing that was faster, cheaper, and more accurate than existing blood testing laboratories, all in one analyzer that could be used outside traditional laboratory settings.