Theranos settles lawsuit from investors claiming they were defrauded

Theranos Inc., running on financial fumes, settled a suit filed by investors who had alleged they were defrauded by the blood-testing firm.

The pact ends a civil case brought by Robert Colman, a former Silicon Valley investment banker, and other plaintiffs who made indirect investments in Theranos, court records filed Friday show. They alleged that Theranos made false and misleading statements about its technology.

The company previously reached costly settlements with a major investor and its former retail partner Walgreens Co. WBA, +0.08% , and settled civil fraud allegations by the Securities and Exchange Commission in March without admitting or denying wrongdoing. Last month, federal prosecutors filed criminal charges against its founder and CEO Elizabeth Holmes and former president Sunny Balwani, alleging that they defrauded investors, doctors and patients. Holmes — who stepped down as CEO ahead of the charges — and Balwani pleaded not guilty.

In the wake of these legal costs, Theranos has been subsisting on a loan backed by its patent portfolio since late last year. The terms of Friday’s settlement weren’t disclosed in the court filings.

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