Once a darling of the start-up world, Elizabeth Holmes has now become a cautionary tale. The founder of Palo Alto, Calif.-based Theranos has been charged with fraud by the U.S. Securities and Exchange Commission for misrepresenting the facts about its so-called revolutionary technology to carry out multiple blood tests using small blood samples and defrauding investors of $700 million. The case brings up a number of questions about how much leeway to give start-up founders and when controls need to be put in place, and also about how and when regulators should be involved. Holmes, who graced the covers of numerous magazines and was once called “the next Steve Jobs,” must pay a $500,000 penalty and will be banned for serving on the board of publicly traded companies for the next decade. She will serve no jail time. The SEC has filed a separate case against Ramesh Balwani, who served as president and COO of Theranos between 2009 and 2016.…