Theranos Investors Cannot Pursue Class-Action Claims

Whether we admit it or not, we’ve all had that dream of being a genius and becoming rich by inventing something revolutionary. We’ve all had that secret fantasy of acquiring wealth and fame. Well, Elizabeth Holmes did just that.

Elizabeth’s Story

Elizabeth Ann Holmes was born in February 1984. She is the daughter of government service worker Christian Holmes IV and congressional committee staffer Noel Daoust.

Ever since she started attending school, she was recognized to have a tireless optimism. And when she was in high school, she started her first business selling C++ compilers to Chinese universities. In 2001, Holmes applied to Stanford and studied chemical engineering and went to work in various labs. In March 2004, she dropped out of Stanford and used her tuition money as her source of funds for a consumer healthcare technology company.

And at just the age of 19, Elizabeth Holmes went and became the world’s youngest female billionaire when she founded Theranos, a revolutionary health technology company – which was valued then at $9 billion – that claimed to have devised revolutionary blood tests using very small amounts of blood with the use of a finger prick.

The Wall Street Journal Report

Theranos was one of Silicon Valley’s unicorn start-ups and seemed to have a really promising start – having all these big-name and famous investors such as David Boies, Tim Draper, Larry Ellison, Rupert Murdoch, Bob Kraft, John Elkann, George Schultz, and James Mattis – but it all came crashing down on October 2015 when John Carreyrou, a two-time Pulitzer Prize-winning investigative journalist working for The Wall Street Journal, wrote about Theranos and exposed the company’s so-called revolutionary technology as being unstable and not yet commercially-ready.

John Carreyrou’s reporting sparked the beginning of the revolutionary company’s downward spiral. By 2016, the FDA, SEC, and Centers for Medicare were all looking into Theranos. In July 2016, Holmes was banned from the laboratory-testing industry for two years. By October 2016, the revolutionary Theranos had shut down lab operations and wellness centers. And in March 2018, Theranos, Holmes, and Balwani – the company’s number 2 – were charged with “massive fraud” by the SEC. Once valued at $9 billion, the revolutionary Theranos has now become essentially worthless.

Judge’s Ruling on Theranos Case

A lot of people, including the company’s investors, we’re happy to hear the news. But just recently, a US judge ruled that investors who claimed that the revolutionary Theranos defrauded them into investing money in the company cannot pursue their claims as a class action.

“It is easy to imagine, for example, that someone invested simply because a friend suggested it, or because all that percolated down the grapevine was the vague insight that Theranos was a fast-growing company, or had promising but unspecific technology,” Cousins wrote in a 34-page order.

A lawyer for the plaintiffs – Reed Kathrein – said that he may appeal or seek reconsideration. “It is too early to say anything other than we are very disappointed,” Kathrein said in an email.

Michael Mugmon, a lawyer for the revolutionary Theranos, said, “We are pleased by the court’s ruling, as it brings the company a step closer to resolving its outstanding legal issues.” Meanwhile, Holmes’s and Balwani’s lawyers did not immediately respond to request for comment.

The ruling by US Magistrate Judge Nathanael Cousins in San Jose, California came as a surprise and is a setback for the company’s investors. The proposed class had included over 200 people who invested in funds from 2013 to 2016 for the purpose of buying shares of the revolutionary Theranos.

It is indeed disappointing and a piece of sad news for investors and patients alike. But what’s really important is that Elizabeth Holmes should have given an apology. As what Sheri Ackert, a Theranos patient, said in an interview, “I would just really appreciate an apology. I don’t need to know what went wrong. Just apologize for your mistake.”

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