VEA Vice Chair Nell Minow is quoted in a Forbes story about a lawsuit against Theranos.
“I’d have to read the complaint to be certain, but most likely the plaintiff will have to prove that company managers did not disclose risks they knew or should have known. They will ask for company records to show that the managers were communicating about problems with the company’s testing product but not alerting investors to the product’s poor results in a timely manner,” she said in an October 11 interview.“At the same time, there is or will probably be an SEC investigation and the outcome there will help — or hurt — this case. My guess is that the SEC will do the usual — [require Theranos to] pay a fine but not admit wrongdoing settlement, which will help the case a little, not a lot,” she said.Minow also suggests a factor that might help Theranos avoid returning capital to shareholders — Director & Officer (D&O) liability insurance. As she explained, “Such suits are almost always settled. The D&O liability insurer takes charge and while in some cases (not this one) management would prefer to argue the correctness of their conduct to the very end, insurers run the numbers and stay out of court.