Investigating Potential Claims – Theranos Inc.
The White Law Group continues to investigate potential claims involving broker dealers who may have unsuitably recommended Theranos Inc. to investors.
Theranos Inc. based in Palo Alto, CA, operates clinical laboratories in Arizona, California, and Pennsylvania. The company, founded in 2003, specializes in the areas of oncology, pediatrics, and geriatrics, according to Bloomberg. It also designs, develops, and manufactures testing products in the United States. In 2010 and 2017, the company filed a Form D to raise capital from investors.
According to a press announcement yesterday, the Securities and Exchange Commission (SEC) has charged Theranos Inc., its founder and CEO Elizabeth Holmes, and its former President Ramesh “Sunny” Balwani with raising more than $700 million from investors through an elaborate, years-long fraud in which they allegedly exaggerated or made false statements about the company’s technology, business, and financial performance.
Theranos and Holmes have reportedly agreed to resolve the charges against them. In addition to a penalty, Holmes has agreed to give up majority voting control over the company, as well as to a reduction of her equity which, combined with shares she previously returned, materially reduces her equity stake.
The complaints allege that Theranos, Holmes, and Balwani made numerous false and misleading statements in investor presentations, product demonstrations, and media articles by which they allegedly deceived investors.
The settlements with Theranos and Holmes are reportedly subject to court approval. Theranos and Holmes neither admitted nor denied the allegations in the SEC’s complaint.
The Risks of Investing in Regulation D Private Placements
Regulation D Private placement investments are a means for smaller companies to raise capital through the sale of equity or debt securities without having to register their securities with the SEC. These investments are often riskier and more complicated than traditional investments, and are only suitable for high net worth, sophisticated investors.
Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Recommendations should be in line with the investor’s age, risk tolerance, net worth, and investment experience.
Despite the risks, brokerage firms continue to push this type of investment because of the high commissions associated with their sale and creation.
The White Law Group continues to investigate the liability that FINRA registered brokerage firms may have for improperly selling private placement investments like Theranos Inc. to their clients.
If you lost money investing in Theranos Inc. or another private placement investment and would like to speak with a securities attorney about your options, please call The White Law Group at 888-637-5510 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on The White Law Group and its representation of investors in FINRA arbitration claims, visit https://www.whitesecuritieslaw.com.