Elizabeth Holmes on Trial – The New York Times

Jury selection begins today in the federal criminal case against Elizabeth Holmes, the founder of the blood-testing tech start-up Theranos. Indicted in 2018, she faces a dozen counts of fraud and conspiracy to commit wire fraud for making false claims about Theranos’s blood tests and business prospects. She has pleaded not guilty. If convicted, Holmes, 37, faces up to 20 years in prison.

Opening arguments in the trial, which is expected to last three to four months, begin next week. At the heart of the proceedings, The Times’s Erin Griffith and Erin Woo write, is whether Holmes intentionally misled investors about her company’s technology or believed her own lies and was manipulated by others.

Court filings recently unsealed provided a preview of what Holmes’s lawyers may say, and whom they could present in her defense.

Holmes may point the finger at others, judging from a request her lawyers made last year that was just made public. She will be tried alone, but is not the only one accused of fraud. Ramesh “Sunny” Balwani, her former boyfriend and the former president and C.O.O. of Theranos, also faces charges. (His trial will begin early next year; he also pleaded not guilty.)

Holmes told the court she could introduce an expert to discuss “a mental condition bearing on guilt,” namely that her relationship with Balwani had a “pattern of abuse and coercive control.” Balwani’s lawyers denied the accusation in a filing.

The tech industry’s “fake it till you make it” culture is also on trial. Holmes was 19 when she started Theranos in 2003. After dropping out of Stanford, she raised $700 million from investors and became the world’s youngest billionaire, as Theranos soared to $9 billion in value.

Holmes carefully cultivated her image, delivering eye-catching promises about Theranos’s revolutionary technology with an unusually deep voice, an intense stare and a uniform of black turtlenecks meant to evoke Steve Jobs. In her heyday, she presented herself as the ultimate ambitious, self-assured entrepreneur out to change the world, a common archetype in the tech industry, which has helped propel start-ups to riches and power. (Her high profile may pose a challenge for jury selection, which is expected to extend into tomorrow, or possibly longer.)

A refresher on who’s who in the rise and fall of Theranos. In addition to Holmes and Balwani, some of the other key figures in the saga include:

  • Tyler Shultz and Erica Chung, the former Theranos employees who blew the whistle on the company’s false claims.

  • David Boies, the litigator who served on the company’s board and tried to shut down whistle-blowers and reporters who questioned the company’s business practices.

  • Former members of Theranos’s star-studded board, including the former secretaries of defense James Mattis and William Perry, as well as the former secretaries of state Henry Kissinger and George Shultz (the grandfather of Tyler, the whistle-blower mentioned above).

  • John Carreyrou, the journalist who wrote the definitive account of fraudulent practices at the company.

America ends its 20-year military occupation of Afghanistan. The last U.S. forces flew out late yesterday, beginning what Secretary of State Antony Blinken called “a new chapter” of engagement. The political implications for President Biden at home are now the subject of scrutiny, as he tries to get infrastructure and other spending plans passed.

Hurricane Ida raises questions about the concentration of America’s oil industry. While early reports suggested most oil facilities escaped major damage, environmentalists said the storm highlighted how much critical energy infrastructure lies in an area exposed to increasingly extreme weather. Power outages raised particular concerns about the resilience of a new natural gas plant in New Orleans.

The F.T.C. cracks down on gas station mergers to lower prices at the pump. A letter from the commission’s chair, Lina Khan, argued for a change in approach to merger reviews in the industry, which she said enabled consolidation that led to “price coordination and other collusive practices.”

China tightens restrictions on video games. For young people, no online gaming is allowed on school days, and it’s limited to an hour a day on weekend and holiday evenings, under new government rules responding to parents’ complaints that prior limits weren’t tough enough.

Starbucks faces one of the most serious efforts to unionize its workers in its history. Workers at three locations in the Buffalo region filed petitions to hold union votes, which could happen in a few weeks. The effort, which challenges Starbucks’ progressive image, follows a similar drive at an Amazon warehouse in Alabama and a strike by workers at food plants in five states.

AT&T is unveiling a new climate initiative today that it claims will provide companies with tangible ways to use 5G and other technologies to drive down carbon emissions.

The telecom giant will join forces with Microsoft, Equinix, Duke Energy and others to create the Connected Climate Initiative. AT&T says it and its partners plan to develop and deploy tech products that companies in the energy, transport and manufacturing industries — which include many of the worst culprits for emissions — can use to reduce their carbon footprint. AT&T has set a target for the group to help businesses collectively eliminate a gigaton of greenhouse gas emissions by 2035. (A gigaton is a billion metric tons, or about 15 percent of the total greenhouse gases emitted each year in the U.S.)

AT&T’s initiative addresses rising concerns that 5G is bad for the environment. 5G requires more transmission towers than previous wireless technologies, which critics say will cause more environmental harm. Also, faster wireless data speeds will lead to even more energy-sapping data usage. Supporters, though, say 5G is more energy efficient at transferring data, and will enable new tracking technologies so companies and individuals can monitor and curtail their use of energy.

But talk is cheap. Michael Brune, the executive director of the Sierra Club, the environmental organization, told DealBook that “setting goals is important, but it’s the results that we need to see more than anything else.” A major scientific report from the U.N. recently concluded that a hotter future is now unavoidable, but there is a chance to slow further warming with a rapid shift away from fossil fuels and a drastic cut to emissions. AT&T said it will be tracking how it measures up to its gigaton target and will publish quantitative progress reports.

Do businesses need new technologies to shrink their carbon footprints? While AT&T’s initiative rests on companies implementing 5G, along with artificial intelligence and other future technologies, Brune said that he believes companies already have enough tools to halt fossil fuel usage. “We shouldn’t use fears about technological availability to slow us down,” he said, though “we should look forward to continuing innovation to make this easier and more equitable.”

—Gary Gensler, the S.E.C. chair, on payment for order flow, a contentious practice on Wall Street. Gensler’s comment that a ban was “on the table,” made in an interview with Barron’s, caused shares of Robinhood, which relies heavily on those payments, to fall 7 percent yesterday.

Private equity firms are snapping up companies in Britain at their fastest pace in years, engaging in bidding wars for companies like Morrisons, the country’s fourth-largest supermarket chain, The Times’s Eshe Nelson reports.

So far this year, private equity firms have bid a collective $63.5 billion to acquire British companies, according to Dealogic. That’s more than what they offered for British buyouts, at this stage in the year, in the previous 10 years combined.

Blackstone, KKR and other large U.S. private equity firms are bulking up their London offices, drawn across the Atlantic by relatively low prices for buyout targets:

  • The average stock in Britain’s FTSE 100 trades at 16 times its reported earnings, versus 27 times for the S&P 500.

  • The British pound hasn’t fully recovered from its post-Brexit drop.

  • A general wariness of American-style buyouts in Britain has kept private equity firms away, but now, with investors flush with cash and seeking places to put it, that seems to be changing.

The takeover battle over Morrisons, which traces its roots to the late 1800s, is a sign of the times. Two private equity firms, Fortress and Clayton, Dubilier & Rice, have traded bids for the retailer. At the same time, British politicians and some investors have tried to block the deal, arguing that buyout firms are bad owners. (Buyout interest in the defense industry has also raised concerns about national security.)

Morrisons seems poised to accept Clayton Dubiliers’s nearly $10 billion offer. That is driving up the value of other potential private-equity targets, which reportedly could include Sainsbury’s, Morrisons’ retail rival. It is also stoking a debate among lawmakers about whether Britain’s buyout boom is a good thing.


  • Companies that have made their stock exchange debuts via direct listing have, on average, outperformed other I.P.O.s. (WSJ)

  • The Russian internet giant Yandex is buying out Uber’s stake in its food tech, delivery and self-driving ventures in a $1 billion deal. (Bloomberg)

  • The Treasury Department said a Chinese private equity firm’s acquisition of chip manufacturer Magnachip poses “risks to national security.” (Reuters)

  • Apple has acquired Primephonic, a classical music streaming service, ahead of the launch of an Apple-branded music app focused on that genre next year. (CNBC)

  • Brilliant Earth, the online jewelry retailer, filed for an I.P.O., looking to tap rising interest in direct-to-consumer brands. (Bloomberg)


  • A C.D.C. panel unanimously backed the Pfizer coronavirus vaccine for 16-year-olds, and a member of Pfizer’s board said he expects the company’s shot for children aged 5 to 11 to be ready by winter. (Reuters, CNBC)

  • The Education Department is investigating five states over their bans on mask mandates, which may run afoul of civil rights laws. (NYT)

  • President Xi Jinping of China said his government’s campaign to address the “barbarous growth” of the tech sector was beginning to make progress. (SCMP)

  • California lawmakers voted to expand a ban on employers gagging workers with nondisclosure agreements to include most harassment and discrimination cases. (AP)

Best of the rest

  • Wall Street bankers are combing Reddit and other online forums for investment advice. (WSJ)

  • At 91, Warren Buffett is showing signs of shifting away from old-economy investments. (CNBC)

  • Mars, the candy giant, aims to cut corporate travel to half its prepandemic levels, telling staff to get on a plane for “purpose, rather than presence.” (The Times of London)

  • The gains of remote work are captured by the few and not the many. (NYT)

  • “How to Solve Any Problem Using Just Common Sense” (NYT)

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