A San Francisco-based hedge fund has filed a lawsuit against Theranos Inc, accusing the blood testing company of using fraudulent methods to attract an investment of nearly $100 million, according to an investor letter filed by the fund.
The hedge fund, Partner Fund Management LP, filed the lawsuit in the Delaware Court of Chancery on Monday afternoon, a letter to the hedge fund’s investors said.
“Through a series of lies, material misstatements, and omissions, the defendants engaged in securities fraud and other violations by fraudulently inducing PFM to invest and maintain its investment in the company,” said the letter, which was reviewed by Reuters.
PFM said in a statement to Reuters that Theranos had "repeatedly lied" about having developed proprietary technologies that worked, and concealed the truth about the commercial viability of its technology and methods.
A spokesman for Theranos said in a statement: "The suit is without merit and Theranos will fight it vigorously. The company is very appreciative of its strong investor base that understands and continues to support the company’s mission."
The company said last week it would lay off about 340 workers, or about 43 percent of its full-time employees, as it closes its clinical labs and wellness Centers, signaling a withdrawal from the consumer blood-testing business.
(Reporting by Lawrence Delevinge and Vishaka George in Bengaluru; Editing by Peter Cooney)