A LOOK AT 4 CEOS BANNED FROM RUNNING THEIR FIRMS

Elizabeth Holmes

In March, Holmes, the founder and CEO of Theranos, and Ramesh Balwani, the former president of the company, were charged with raising more than $700 million from investors through “an elaborate, yearslong fraud in which they exaggerated or made false statements about the company’s technology, business and financial performance.”

Holmes agreed to settle the fraud charges, paying a $500,000 penalty, returning her remaining shares and relinquishing voting control over Theranos. She was barred from serving as an officer or director at a public company for 10 years.

That’s not the end of the legal issues. Balwani has decided to fight the charges, and they both face criminal charges.

Rajat K. Gupta

Gupta, who ran the consulting firm Mckinsey, was sentenced to two years in prison for leaking boardroom secrets about Berkshire Hathaway’s investment in Goldman Sachs, as well as details about Goldman’s financial results.

The recipient of those leaks, Raj Rajaratnam, the former head of Galleon Group, was sentenced to 11 years for insider trading, and was barred from association with any investment adviser, broker, dealer, municipal securities dealer or transfer agent, but had the right to apply for re-entry after five years.

In 2013, Gupta was permanently barred from serving as an officer or director at a public company.

Martha Stewart

In 2006, Stewart settled civil insider-trading charges with the SEC, which contended that she illegally used nonpublic information when she sold 4,000 shares of a company called Imclone Systems.

She paid $195,000 in fines and penalties and was barred from serving as director or CEO of any public company for five years. This did not significantly curtail her corporate responsibilities at the time.

She had already been convicted in a criminal trial of obstructing investigation into her trading activities.

Jeffrey Skilling

Skilling, the former CEO of Enron, spearheaded a fraud that destroyed the energy giant in 2001 and ultimately sentenced to a 14-year prison term. He moved out of prison and into a halfway house last month.

The SEC sought financial penalties, the return of ill-gotten gains, an injunction from future violations of federal securities laws, and a permanent bar from being a director or an officer at a publicly held company.

The civil claims brought in 2004 were stayed as criminal proceedings were concluded. In 2015, the SEC obtained a summary judgment, barring Skilling from ever serving as an officer or director at a publicly held company.it sought a similar punishment for Kenneth Lay, the former chairman and CEO of Enron. Lay died in 2006 while waiting for his criminal sentence, and a judge voided his conviction because he could not appeal his guilty verdict.