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Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

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Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#211

Post by tzhenghao »

ChuckMcM wrote: post #23

Ok, this is the money line in that press release for me: “The charges against Theranos, Holmes, and Balwani make clear that there is no exemption from the anti-fraud provisions of the federal securities laws simply because a company is non-public, development-stage, or the subject of exuberant media attention.” For all those entrepreneurs are trying to "fake it until you make it" be aware that the SEC considers your…

Don't get me started on the whole ICO, crypto hype. Responsible optimism and execution is key to a company's success. Disregard this, and you'll face consequences like these.

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#212

Post by mathattack »

nathanaldensr wrote: post #2

Theranos and Holmes have agreed to settle the fraud charges levied against them. Holmes agreed to pay a $500,000 penalty, be barred from serving as an officer or director of a public company for 10 years, return the remaining 18.9 million shares that she obtained during the fraud, and relinquish her voting control of Theranos by converting her super-majority Theranos Class B Common shares to Class A Common shares. Du…

This will wipe her out, and likely kill her career. Remember, this is just the SEC. The pain they inflict is commensurate to investor pain.

The government still should go after them for endangering people’s lives. There should be long jail terms for that.

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#213

Post by _m8fo »

DannyBee wrote: post #196
_m8fo wrote: post #100

Earlier quoted context omitted.

I've already read that -- it does not explain why . It simply states that it cannot. What law restricted it? Why was that law put into place? How often are recommendations for prosecution followed up on successfully? EDIT: Thanks everyone for the information -- very interesting.

Federal agencies are explicitly affirmative authority grants. Their powers are laid out in those acts. They can only do those things. They cannot do other things just because "no law restricts it". The exact authority grant is complicated. You want: https://www.law.cornell.edu/uscode/text/15/78d and following sections, plus a whole bunch of stuff enacted elsewhere. The part you are probably most looking for is: https…

Thanks DannyBee. I appreciate your reply.

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#214

Post by beambot »

vl wrote: post #200
Waterluvian wrote: post #25

Is Holmes still rich after this? I can't tell just how much of her wealth she's being forced to return in form of shares.

>Is Holmes still rich after this? But why it matters at all? Penalty should be proportional to the deed, not to the person's finances.

As a curious aside: In some scandanavian countries, the penalties are directly tied to wealth (e.g. the $103,000 speeding ticket [1]). The idea is to make the punishment proportional to each individual so that wealth cannot simply grant you a free pass to violate "minor" laws.

[1] https://www.theatlantic.com/business/archive/2015/03/finland...

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#215

Post by jaclaz »

the-dude wrote: post #177
Kliment wrote: post #170

Unfortunately pricks.com, by Blake Ross, is no longer online. However, the CDN that hosted it is still up so here is the direct link - it's a script for a comedy show based on theranos, and painfully close to reality https://web.archive.org/web/20160604083644/http://static1.sq...

Link does not work : the website expired.

Courtesy Wayback Machine:

https://web.archive.org/web/20160604083644/http://static1.sq...

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#216

Post by sctb »

burner5692 wrote: post #55
ChuckMcM wrote: post #23

Ok, this is the money line in that press release for me: “The charges against Theranos, Holmes, and Balwani make clear that there is no exemption from the anti-fraud provisions of the federal securities laws simply because a company is non-public, development-stage, or the subject of exuberant media attention.” For all those entrepreneurs are trying to "fake it until you make it" be aware that the SEC considers your…

The more SEC oversteps their boundaries, the less anyone will take them seriously.

Could you please start commenting substantively? Many of your recent posts have the effect of trolling, whether that was your intention or not.

https://news.ycombinator.com/newsguidelines.html

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#217

Post by joering2 »

> Holmes — a Steve Jobs wannabe who dressed exclusively in black turtlenecks — settled with the regulators for $500,000 while neither admitting nor denying the accusations.

What Holmes did is most likely a fraud... but what the regulators did in this part above is pure and simple blackmail and extortion... the only problem is that who's gonna prosecute the persecutors....

This is really not far from wild wild west hundred years ago, where everyone was wearing guns at their belts. Truly mind boggling!!

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#218

Post by wpietri »

mbell wrote: post #209
ChuckMcM wrote: post #23

Ok, this is the money line in that press release for me: “The charges against Theranos, Holmes, and Balwani make clear that there is no exemption from the anti-fraud provisions of the federal securities laws simply because a company is non-public, development-stage, or the subject of exuberant media attention.” For all those entrepreneurs are trying to "fake it until you make it" be aware that the SEC considers your…

"fake it until you make it" generally refers to the product implementation vs pitch on the consumer side. e.g. You pitch "The best automated way to do X!", but in actuality you have a horde of people doing the work initially to figure out the problem before building the actual automation. There is nothing wrong with this and remains a completely viable approach. What you don't do is tell your investors you've already…

I think the Concierge and Wizard of Oz approaches [1] are just one thing people mean by "fake it 'til you make it", but I definitely don't think they're the most common meaning.

Startups engage in all sorts of puffery, trying to project the appearance of success long before they have actual success. Fancy websites, fancy offices, sales and investment pitches that cherry pick stories, numbers, and milestones that give an enormously positive impression of what's generally a very bumpy reality.

I personally don't like that, but the game is the game. But it's very easy for that puffery to slide over into outright fraud when things get desperate. Which is why I'm so glad that the SEC is going after Theranos with great vigor. Hopefully these clowns will end up sharing a cell with Shkreli, giving every would-be startup CEO a clear example of what happens when they push it too far.

[1] https://www.allencheng.com/concierge-mvp/

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#219

Post by neaden »

vl wrote: post #200
Waterluvian wrote: post #25

Is Holmes still rich after this? I can't tell just how much of her wealth she's being forced to return in form of shares.

>Is Holmes still rich after this? But why it matters at all? Penalty should be proportional to the deed, not to the person's finances.

I think there is a reasonable argument that it should be proportional to finance. Let's say two people both get speeding tickets, one of whom is making $10 an hour the other makes $100 an hour. There is an argument that you should fine them based on their income as a proportional punishment, otherwise the fine may be excessive for the person with a small income, but negligible and not a deterrant for a person with a large income.

Re: Theranos, CEO Holmes, and Former President Balwani Charged with Fraud

#220

Post by dpark »

_m8fo wrote: post #139
Karunamon wrote: post #129

Earlier quoted context omitted.

Criminal litigation authority is on a whitelist, not a blacklist. It's not that a law restricted them, it's that they simply were never granted that authority. Random government authorities can't bring criminal proceedings anymore than the meter maid writing a parking ticket has the ability to haul you to court for parking in the wrong place. They send the information along to the people who do have that authority an…

> The key words in the article are "civil, not criminal". My keyword is why .

Do you believe that every agency in the government should be able to send people to jail? The SEC can't send people to jail for the same reason the Dept of Housing and Urban Development and the Post Office can't, because they have not been granted that legal authority. The ability to imprison is not granted to most Federal agencies.

Why would the SEC be able to imprison people? That's not their job. They also can't set the prime interest rate or grant radio spectrum rights to AT&T.

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