Elizabeth Holmes Fraud, Meghan Markle Fake Kidnapped, Snap’s Sorry: Broadsheet March 15
Good morning, Broadsheet readers! Claire Zillman here, filling in for Kristen and Val. Elizabeth Holmes gets pricked by the SEC, Snapchat says it’s sorry, and Meghan Markle is fake-kidnapped. Have a fabulous Thursday.
• Bloody hell. The fairytale storybook featuring blood testing startup Theranos and once-upon-a-time wunderkind Elizabeth Holmes was slammed shut yesterday when the SEC charged the former unicorn and its founder with fraud. Holmes settled the charges by forfeiting her voting control of Theranos, paying a $500,000 fine, and agreeing to not serve as a public company officer or director for ten years.
A few years back, the 30-something Holmes became a biotech and media darling after founding Theranos, a company that promised to conduct “the full range” of lab tests with just a few drops of blood. But according to the SEC’s allegations, Holmes raised some $700 million from investors as part of years-long scheme in which she exaggerated or lied about Theranos’s technical capabilities and its financial performance.
“The Theranos story is an important lesson for Silicon Valley,” Jina Choi, director of the SEC’s regional office in San Francisco, said yesterday. “Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday.”
It feels like that lesson is beginning to be learned. The sensationalism that gave rise to Theranos’s hype and astronomical valuation—at one point, it was worth $9 billion—has ceded, somewhat, to skepticism, as consumers, lawmakers, and tech’s own elite give the side-eye to the industry’s bro culture and its (so-far) feckless policing of misinformation.
What might be the bigger takeaway is the fate of Holmes herself. Once heralded as the next Steve Jobs with her monochrome uniform of black turtlenecks, Holmes topped Forbes list of self-made female billionaires in 2015 with an estimated net worth of $4.5 billion. That fortune, of course, was based largely on stock that is now likely worthless. In fact, the SEC noted that while earning at most $390,000 a year in salary between 2013 and 2015, Holmes “never sold any of her Theranos stock.” So, as Bloomberg’s Matt Levine put it, Holmes was, in a very real sense, “the biggest victim of her own fraud.”
ALSO IN THE HEADLINES
• Litigation heats up. One women whose frozen eggs were at Pacific Fertility Center has filed a class action lawsuit against the company for gross negligence in its maintenance, inspection and monitoring of a storage freezer that malfunctioned in early March. The facility is one of two that recently experienced technical glitches that may have damaged some—if not all—of the affected tissue. Washington Post
• Hotline bling. Fortune‘s Polina Marinova (subscribe to her newsletter on deals and dealmakers, Term Sheet, here) talks to Jillian Manus, a managing partner at Structure Capital and a judge on “The Pitch” podcast, in an interview that covers everything from the period Manus spent living in homeless shelters to her advice to early-stage founders. She also talks about why she created an SOS hotline for founders facing sexual harassment. Fortune
• Snap is sorry. Snapchat has removed an ad from its platform that made “light of domestic violence.” The promotion for a game asked users if they would “rather slap Rihanna or punch Chris Brown” in what appeared to be a reference to Brown’s conviction for assaulting Rihanna in 2009. Snap apologized for the incident, saying the ad “was reviewed and approved in error, as it violates our advertising guidelines.” BBC
• Lean Neutral. Lawmakers have proposed a bi-partisan bill to ban forced arbitration in sexual harassment cases—a widespread practice that arguably silences women who’ve been mistreated. For all its public championing of women, Facebook won’t say if it supports the legislation or not, and the social network defended its use of forced arbitration (it doesn’t require that participants keep silent) to the Huffington Post. Huffington Post
• Angela, again. Angela Merkel started her fourth term as German chancellor yesterday. She was confirmed by a narrow parliamentary vote that pointed to her diminished authority among MPs. Financial Times
MOVERS AND SHAKERS: Signet, the jewelry company at the heart of a massive sex harassment scandal, has added two board members: Sharon McCollam, most recently CFO at Best Buy, and Nancy Reardon, most recently HR and communications head at Campbell Soup Company.
IN CASE YOU MISSED IT
• An even higher high bar. After a recruiter sued YouTube, accusing it of retaliating against him for complaining of discrimination against white and Asian men, The Wall Street Journal examined the legal precedent for winning such cases. In short: “Discrimination is generally difficult to prove, and so-called reverse-discrimination lawsuits must pass an even higher high bar.” WSJ
• Niche news. Instances of sexual abuse by women are rare, yet FoxNews.com seems to be paying inordinate attention to stories of female teachers having sex with male students. In the first half of 2017, it posted fewer than 20 stories about women, mostly teachers, accused of sex offenses. In the last six months, it’s published 98. The flurry of coverage follows the appointment of a new editor in chief and Fox News’s own sexual harassment scandals. New York Times
• Royal treatment. Becoming a princess isn’t all glam. Meghan Markle reportedly underwent two days of security training—including a staged kidnapping—as part of her prep for royal life. New York Magazine
• A+. Reporter Lucy Ford wrote a dissertation at university titled “Dumb Blonde Ambition: Legally Blonde, Postfeminism and the Reimagination of the ‘Strong Female Character'” and presented it to the movie’s star Reese Witherspoon during a recent interview. Ford said she watched Legally Blonde 800 times as part of her research. Elle
ON MY RADAR
Melania Trump will meet with tech giants including Facebook and Google to talk cyberbullying Washington Post
Stormy Daniels is the Anti-Trump: He’s finally met his match. New York Magazine
The 2016 election inspired her to run for Congress — as an unapologetic Trump supporter Washington Post