Theranos Wants Investor Fraud Settlement, But Only on Its Terms

(Bloomberg) -- Fallen unicorn Theranos Inc. and investors who allege they were duped by a massive fraud are in a tug of war, with each side trying to attach different strings to settlement talks.

A lawyer for the investors says he needs more information on the finances of the blood-test startup, which is now on its last legs, and wants to take depositions of founder Elizabeth Holmes and former president Ramesh “Sunny” Balwani before “meaningful settlement negotiations can occur.”

Plaintiffs’ attorney Reed Kathrein also said he’s asking for reconsideration by the judge who last month refused to grant class-action status to the case, which was brought on behalf of about 200 “indirect” investors who bought shares in the closely held startup through investment funds. Kathrein has two representative investors still in the fight.

Theranos said talks should begin “now,” before any further effort and expense go into questioning the company’s principals and other witnesses.

“As for the production of financial information not relevant to this pending litigation, defendants are willing to work with the mediator (or settlement judge) to ensure that each side has sufficient information to engage in meaningful settlement discussions,” the company said in a filing Friday in federal court in San Jose, California.

To contact the reporter on this story: Peter Blumberg in San Francisco at pblumberg1@bloomberg.net

To contact the editors responsible for this story: Elizabeth Wollman at ewollman@bloomberg.net, Peter Blumberg

©2018 Bloomberg L.P.