Regulatory agencies in California and Washington caution that Zenefits and current or former employees could face criminal charges related to the alleged sale of health insurance without proper brokers' licenses.
In Washington state, a decision on whether to pursue legal penalties could come in a matter of weeks, according to a spokeswoman for the Office of the Insurance Commissioner.
"The best I can say is, I believe it's soon," spokeswoman Stephanie Marquis told the Business Times on Tuesday. "Within a month."
Zenefits co-founder and former CEO Parker Conrad resigned a week ago from the San Francisco-based HR and insurance brokerage startup. Former top marketing executive Sam Blond was replaced later in the week.
Regulators in California said they too are investigating Zenefits for allegedly having employees without proper credentials selling insurance. And newly named CEO David Sacks acknowledged that some compliance processes and controls "have been inadequate, and some decisions have just been plain wrong."
Late in the week, Sacks also disclosed that "many of our California sales representatives" had access to a software tool that may have helped them circumvent California law, by bypassing required pre-licensing training material online.
http://www.bizjournals.com/sanfranc...s-insurance-licensing-conrad-david-sacks.html
These grand promises were bolstered by Zenefits’ early growth. Its annual recurring revenue — an accounting measure preferred by subscription-based software companies — reached $1 million by the end of 2013, the year Zenefits was founded. Recurring revenue hit $20 million by late 2014, and was projected to reach $100 million by late 2015.
The exponential growth was catnip to investors. The start-up raised $500 million last year at a $4 billion valuation, one of the largest financing rounds in a year of mega-fundings. At one point, Andreessen Horowitz, Silicon Valley’s pre-eminent venture firm, had invested more in Zenefits than in any other company. In total, Zenefits has raised about $581 million.
http://www.nytimes.com/2016/02/18/t...at-start-ups.html?partner=rssnyt&emc=rss&_r=0
Pretty fascinating scandal going on, the very short version is: Zenefits is a hot start-up that sells insurance. Many of its sales people weren't licensed to sell insurance. And worse, someone within Zenefits made software to help cheat the licensing process. The CEO stepped down recently and the new CEO promised a robust compliance regime.