Theranos/Patisserie Valerie/Plus500 - What would you have done?

We have recently read Bad Blood, the intriguing story behind the corporate fraud at Theranos as well as kept a keen eye on the Patisserie Valerie and Plus500 stories as they develop. Would you have picked up on any of these if you had been sent the Investor Deck? Would our process, which is ever evolving, have raised red flags? Certainly, there were intelligent investors who were stung but what are the lessons learnt?

We would highlight an area for each case which might have helped but please - tell us what you would have done differently?

Theranos - Don’t be impressed by the names on the board unless they have actual experience within the sector. Make sure they are competent and exercise independent judgment. Also, if possible - verify claims made by the CEO before investing and talk to clients!

Patisserie Valerie - It’s easy to say ‘if things look too good to be true then they probably are’ but when a business is being audited, you can normally get a sense of comfort. The warning sign may have been just the growth in outlets - growth, through acquisition of outlets, can lead to vulnerable accounts. Dissecting the accounts is difficult but viewing the management accounts tells a story - financial and management accounting need to have greater collaboration and as the company grows, the information within the management accounts should do.

Plus500 - currently no fraud has been shown following a reporting error in which a loss of £100m was overlooked. Is there anything that investors could have done to mitigate this? Probably not, but how would you interpret the opportunity after the error has been reported and the share price has plummeted? What steps would you take in order to crystallise your opinion on whether this is a genuine mistake or something more sinister? Does one simply have to say that there is not enough information to make an informed decision and therefore default to "no"?

All thoughts welcome - what would you have done?