Nikola to Pay $125 Million to Settle Fraud Charges, Founder in Dutch
Nikola Corp. has agreed to pay $125 million to settle charges levied by The Securities and Exchange Commission (SEC) that the company actively defrauded investors by providing misleading information about its technical prowess, production capabilities, and general prospects.
The settlement comes after a salvo of civil and criminal charges were launched against Nikola’s founder Trevor Milton, who got in trouble for convincing investors that the prospective automaker had fully functional prototypes boasting technologies other companies would have envied when that wasn’t actually the case. Milton was chided for using social media to promote false claims about the business, with his pleading not guilty to fraud charges brought up by the Department of Justice in July.
He also got out of the company shortly after the Hindenburg Research report that nuked the company’s stock prospects was released in September of 2020. The paper criticized the company for having largely fabricated the technologies it was trying to promote and framed Milton as a career fraud. As you can imagine, this didn’t do much for its stock valuation — which was already dropping at the time. Despite having been able to move shares at $65 in June of 2020, Nikola shares are now hovering around $9 apiece.
The Justice Department was upset that Milton managed to get away with tens of millions of dollars as a result of the alleged misconduct. The trial is currently ongoing with Nikola’s founder having failed to get the case dismissed or moved. However, the details of that case have made their way over to the SEC, which used them to help establish a timeline. The agency has alleged that Milton embarked on a public relations campaign aimed at maintaining Nikola’s then-inflated stock price using false claims about technological milestones and product capabilities that convinced investors to lay down their money.
According to Reuters, the SEC is using this as its central argument against the company and is part of the agency’s forthcoming crackdown on companies using special-purpose Acquisition companies (SPACs) to pump stocks and falsified information to lure in unwitting investors.
From Reuters:
Milton’s misleading statements aimed at inflating share prices began even before Nikola had produced a “single commercial product or had any revenues from truck or hydrogen fuel sales,” the SEC order said.
Nikola, which did not admit or deny the SEC’s findings, has agreed to cooperate with ongoing litigation and investigation, the SEC said. The company previously disclosed expectations of the hefty penalty in November.
Nikola “is responsible both for Milton’s allegedly misleading statements and for other alleged deceptions, all of which falsely portrayed the true state of the company’s business and technology,” Gurbir Grewal, the SEC’s enforcement director, said in a statement.
Nikola said in a statement that it will continue to execute on its strategy and expand its manufacturing network. The company is seeking reimbursement from Milton for “costs and damages in connection with the government and regulatory investigations,” it said.
The company’s current CEO, Mark Russell, said that Nikola anticipated paying a $125 million penalty to the SEC under a proposed deal to settle civil fraud charges in November. It will also be seeking reimbursement from Milton for costs and damages in connection with the government and regulatory investigations.
[Image: Nikola]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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a daycab that can be charged at the store as the 53 ft trailer is being unloaded would do just fine in most major markets. it can also be charged as its being loaded at the depot which is likely in the boonies where the cheap land is
Never trusted them from Day 1. Nikola? As in Nikola Tesla and the dominant EV maker at the time?