Elizabeth Holmes, founder of blood-testing company Theranos, indicted on wire fraud charges

Elizabeth Holmes, founder of the blood-testing start-up Theranos, and her former chief operating officer, Ramesh “Sunny” Balwani, were indicted by a federal grand jury Friday on charges of defrauding investors, patients and doctors.

The indictments, on nine counts of wire fraud and two counts of conspiracy to commit wire fraud, complete the company’s fall from Silicon Valley darling to cautionary tale.

Theranos said it would disrupt medicine by selling quick, cheap blood tests directly to consumers, but its promises frayed under scrutiny from several federal agencies and a Wall Street Journal investigation. read more »

Bitcoin Could Break the Internet, Central Bank Overseer Says

Swiss-based BIS says cryptocurrencies have design flaws
Blockchain can’t handle or replace current payment system load

The Bank for International Settlements just told the cryptocurrency world it’s not ready for prime time -- and as far as mainstream financial services go, may never be.

In a withering 24-page article released Sunday as part of its annual economic report, the BIS said Bitcoin and its ilk suffered from “a range of shortcomings” that would prevent cryptocurrencies from ever fulfilling the lofty expectations that prompted an explosion of interest -- and investment -- in the would-be asset class. read more »

Rise of the machines: has technology evolved beyond our control?

Over the last few decades, trading floors around the world have fallen silent, as people are replaced by banks of computers that trade automatically. Digitisation meant that trades within, as well as between, stock exchangescould happen faster and faster. As trading passed into the hands of machines, it became possible to react almost instantaneously. High-Frequency Trading (HFT) algorithms, designed by former physics PhD students to take advantage of millisecond advantages, entered the market, and traders gave them names such as The Knife. These algorithms were capable of eking out fractions of a cent on every trade, and they could do it millions of times a day.

Something deeply weird is occurring within these massively accelerated, opaque markets. On 6 May 2010, the Dow Jones opened lower than the previous day, falling slowly over the next few hours in response to the debt crisis in Greece. But at 2.42pm, the index started to fall rapidly. In less than five minutes, more than 600 points were wiped off the market. At its lowest point, the index was nearly 1,000 points below the previous day’s average, a difference of almost 10% of its total value, and the biggest single-day fall in the market’s history. By 3.07pm, in just 25 minutes, it recovered almost all of those 600 points, in the largest and fastest swing ever.

In the chaos of those 25 minutes, 2bn shares, worth $56bn, changed hands. Even more worryingly, many orders were executed at what the Securities Exchange Commission called “irrational prices”: as low as a penny, or as high as $100,000. The event became known as the “flash crash”, and it is still being investigated and argued over years later. read more »

Wells Fargo receives final approval to settle $142 million lawsuit

Wells Fargo & Co said on Friday it received final approval from a district court in California to settle a $142 million class-action lawsuit, which compensates customers affected by a sales scandal related to phony bank accounts.

The settlement, in which Wells had received a preliminary approval in July last year, sets aside funds for compensating customers after the bank opened consumer or small business accounts, credit cards or lines of credit without their knowledge between 2002 and April 2017.

The United States’ fourth-biggest bank is dealing with the fallout of two years of investigations, agreeing in April to pay $1 billion to settle with regulators who say it forced auto insurance on hundreds of thousands and routinely hit homebuyers with excessive fees.

Last month, the bank also agreed to pay $480 million to resolve a securities fraud lawsuit filed with the District Court for the Northern District of California which alleged the bank made certain misstatements and omissions in disclosures related to its sales practices.  read more »

Executives at Publicly Traded Transportation Company Charged with $245 Million Accounting and Securities Fraud Scheme

Two former executives of Roadrunner Transportation Systems Inc., a publicly traded transportation and trucking company formerly headquartered in Cudahy, Wisconsin, were charged in an indictment unsealed today for their alleged participation in a complex accounting and securities fraud scheme that resulted in a loss of more than $245 million in shareholder value.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, U.S. Attorney Matthew D. Krueger of the Eastern District of Wisconsin, Regional Special Agent in Charge Thomas J. Ullom of the U.S. Department of Transportation Office of Inspector General (DOT-OIG) and Special Agent in Charge R. Justin Tolomeo of the FBI’s Milwaukee Field Office made the announcement.

Mark R. Wogsland, 53, and Bret S. Naggs, 52, both of Cedarburg, Wisconsin, were charged in an indictment filed in the Eastern District of Wisconsin with one count of conspiracy to make false statements to a public company’s accountants and to falsify a public company’s books, records and accounts; one count of conspiracy to commit securities fraud and wire fraud; three counts of securities fraud; and four counts of wire fraud.  Naggs, the former  controller for Roadrunner’s Truckload operating segment, and Wogsland, the former controller and director of accounting for Roadrunner’s Truckload operating segment, both worked out of Roadrunner’s corporate headquarters in Cudahy. Roadrunner Transportation Systems Inc. is currently headquartered in Downers Grove, Illinois.  read more »