Theranos Case Implications for Corporate Governance & Accountability

In this Pharmaceutical Executive video interview, Matthew Yelovich, partner at Cleary Gottlieb, discusses the appeals of both Theranos founder Elizabeth Holmes and the company’s COO, Ramesh “Sunny” Balwani. The Ninth Circuit recently affirmed the duo’s convictions after considering questions about expert and lay testimony. Yelovich emphasizes the importance of careful vetting of statements to investors and the public, especially in tech-driven companies. The conversation also explores the complexities of sentencing in fraud cases, the importance of corporate governance and accountability, and his transition in late-2024 from federal prosecutor to a role at Cleary Gottlieb.

Pharmaceutical Executive: Given the public interest in this case, what are some of the broader implications for corporate governance and accountability that you believe it highlights?
Matthew Yelovich: Founders and companies would do themselves well to carefully vet their statements to investors and the public to make sure that things line up. In the Silicon Valley and Bay Area, we have immensely talented, amazing, and entrepreneurial companies and founders that are doing great things with technology all the time. That's part of what makes the region so dynamic.

One lesson from this case is there are going to be times when promising technology doesn't work out. That's not a crime. When that does happen, though, the statements and choices you make as a company are really important. Having inside or outside advisors who have some experience in that field can be really valuable. That would be something that companies would be well placed to look into.

PE: You oversaw major corporate fraud prosecutions, including a significant cryptocurrency seizure. How does your experience with these cases inform your understanding of the complexities of modern financial crimes?
Yelovich: There's really no substitute for spending years working on cases like this, particularly starting on the government investigatory side, in order to inform how you react when you're representing clients in this space and on these types of cases. It has helped me immensely in internal investigation work. You know what to look for, the subtleties of these issues, who might have information, and how to vet important versus less-important issues much quicker having spent years both directly doing and overseeing those kinds of cases.

One thing that I really love about the work I get to do now is Cleary Gottlieb gets to represent folks facing some of their most complex challenges. Having been both involved as a prosecutor doing complex fraud cases, and then as appellate chief overseeing all of our appellate litigation for the United States on complex fraud cases, getting to be on the flip side and dealing with the most complex issues our clients face is a really engaging, intellectual, and rewarding exercise for me.