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The SEC says uBiome's founders raised $60 million on a sham and sold $5 million of their own stock each. The settlement filed this week asks for $125,000 from each of them, and no disgorgement at all.

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On September 14 the SEC filed consents and proposed final judgments against Jessica Richman and Zachary Apte, co-founders of the microbiome testing company uBiome, five and a half years after suing them for fraud. Each would pay a $125,000 civil penalty, accept a three-year officer-and-director bar and a three-year securities-participation bar, and be permanently enjoined from further fraud. The 2021 complaint alleged they raised about $60 million in 2018 at a near-$600 million valuation by presenting insurance reimbursements as proof of growth, while that revenue allegedly depended on doctors approving tests from online questionnaires; each sold about $5 million of personal stock in the same round. The complaint sought disgorgement and prejudgment interest. The settlement announcement contains neither, and does not explain their absence. A judge must still approve it.

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uBiome sold gut-microbiome tests. Investors put about $60 million into it in 2018, valuing it at nearly $600 million. The FBI searched its San Francisco offices in 2019, the company stopped clinical testing, and it ended in bankruptcy that September.

The SEC sued its two founders in March 2021. On September 14, 2026 it filed the settlement.

What each side gives

Jessica Richman and Zachary Apte would each:

  • pay a $125,000 civil penalty;
  • accept a three-year officer-and-director bar;
  • accept a three-year bar on taking part in the issuance, purchase, offer or sale of any security, "except for purchases or sales for their own personal accounts";
  • be permanently enjoined from further violations of the antifraud provisions.

They settled "Without admitting the allegations in the SEC's complaint," and a judge in the Northern District of California must still enter the judgments.

What the complaint alleged

The 2021 complaint's first line:

During 2018, Jessica Richman and Zachary Apte (together, "Defendants") fraudulently raised approximately $60 million for the private company they founded, uBiome, Inc.

Its account of how: uBiome told investors its growth rested on insurance reimbursements for doctor-ordered tests. The Commission alleged that this "depended on duping doctors into ordering unnecessary tests and other improper practices that Richman and Apte directed," including a portal that let doctors approve tests from online questionnaires without the relationship insurers required, and backdated or misleading records sent to insurers. By early 2018, the complaint says, nearly 91 percent of revenue came from insurance.

In the same 2018 round, according to the complaint, Richman sold about $5 million of her own stock and Apte about $5 million of his. uBiome's own general counsel had warned them about the doctor portal in July 2017. Both invoked the Fifth Amendment during the investigation.

The number that is missing

The 2021 complaint asked the court for "disgorgement of all ill-gotten gains or unjust enrichment ... together with prejudgment interest thereon."

The settlement announcement contains no disgorgement and no prejudgment interest. It does not say they were waived, reduced, credited against anything or declined, and it gives no figure for investor losses. Against about $60 million raised and about $10 million in personal stock sales alleged, the money in the settlement is $250,000 in total, paid to the government as penalties.

What the release does not say

  • Whether the court has approved it. The judgments were filed, not entered.
  • Why it took five and a half years, or what happened in the case in between.
  • Anything about a criminal case. The complaint describes an FBI search warrant in 2019; the release does not mention the Justice Department.
  • Anything for investors. No fair fund, no distribution, no loss total, and no reference to the bankruptcy estate.
  • There is no statement from any SEC official, which is unusual for a settlement announcement.

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