Electric vehicle company Nikola will pay $125 million to settle civil charges from the Securities and Exchange Commission of defrauding investors. The company was accused of misleading investors about its in-house production capabilities, technological advancements, reservations and orders, hydrogen production and more.
The SEC accused founder and former CEO Trevor Milton of undertaking "a public relations campaign aimed at inflating and maintaining Nikola’s stock price" through tweets and media appearances before the company had made a commercial product. It said that the company also misled investors by "misrepresenting or omitting material facts" about the hydrogen station at its headquarters, how long it would take to refuel its concept vehicles, the source and cost of power for planned hydrogen production and the risks and benefits of a mooted partnership with a major automaker.
“As the order finds, Nikola Corporation 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,” SEC enforcement director Gurbir S. Grewal said in a statement.
Although Nikola did not admit to or deny the SEC's charges of securities law violations, it agreed to some voluntary undertakings, to pay the penalty and to cease and desist from "future violations of the charged provisions." It will cooperate with ongoing litigation and investigation too.
"We are pleased to bring this chapter to a close as the company has now resolved all government investigations," Nikola said in a statement. "We will continue to execute on our strategy and vision to deliver on our business plan, including delivering trucks to customers, expanding our manufacturing facilities and our sales and service network, and building out our hydrogen infrastructure ecosystem including hydrogen production, distribution and dispensing stations." The company also said it was seeking reimbursement from Milton "for costs and damages in connection with the government and regulatory investigations."
Nikola became a publicly traded company in June 2020 through a special purpose acquisition company (SPAC) deal, which enables companies to bypass the usual process of going public. That September, reports suggested the SEC was looking into Nikola's claims about its electric trucks. Milton, who had stepped down as CEO just before the company went public, resigned as executive chairman a few days after news emerged about the probe.
A grand jury indicted Milton on fraud charges in July 2021. He was accused of lying to investors about “nearly all aspects of the business” to increase Nikola's share price. He denied the charges and is free on bail pending a trial that's scheduled for April.
Meanwhile, Nikola delivered its first electric trucks to customers last week.
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