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Home » Technology » Electric truck group Nikola pays $125m to settle SEC fraud charges

Electric truck group Nikola pays $125m to settle SEC fraud charges

by PublicWire
December 21, 2021
in Technology
Reading Time: 3 mins read
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Electric truck start-up Nikola has agreed to pay $125m to settle charges that it defrauded investors by misleading them on the capabilities of vehicles, the US Security and Exchange Commission said on Tuesday.

The US market watchdog said Trevor Milton, the company’s founder and former chief executive, had given a false impression of the technological capabilities of its products. It also accused him of misleading investors over the company’s production capabilities, order numbers and financial outlook.

Milton resigned last year after research reports first surfaced accusing the company of an “intricate fraud”, including the charge that its proprietary technology had actually been purchased from other companies.

Gurbir Grewal, the director of the SEC’s enforcement division, stated: “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.

“This misconduct — and the harm it inflicted on retail investors — merits the strong remedies today’s settlement provides.”

Nikola said: “We are pleased to bring this chapter to a close as the company has now resolved all government investigations . . . Under the terms of the resolution, Nikola neither admits nor denies the SEC’s findings in this matter.”

“The company has taken action to seek reimbursement from its founder, Trevor Milton, for costs and damages in connection with the government and regulatory investigations,” it added.

Milton did not respond to a request for comment.

The announcement is the latest sign that the commission is tightening its scrutiny of special purpose acquisition companies, so-called blank cheque groups that take private companies public through a merger. Nikola went public through this route after merging with VectoIQ Acquisition last June.

Gary Gensler, the SEC chair, has warned that such acquisitions may not offer investors as much protection as they might expect from an initial public offering.

The company said last month it was setting aside $125m for the settlement, which it said it expected to pay in instalments over two years. The company added it would seek reimbursement from Milton himself, who is also facing criminal fraud charges.

The SEC case was launched in July, at the same time that prosecutors launched a criminal prosecution against Milton. In its complaint, the commission detailed a range of misleading statements made by the former chief executive.

It explained how Milton had showed potential investors at an event in 2016 what he claimed was a fully functioning truck, when in fact it was not operable and its electrics worked only because it was plugged into an external power source.

The SEC also cited a now-infamous video, which it said Milton had ordered to be posted to YouTube, showing a Nikola One truck moving down a road — while omitting the fact the truck was rolling downhill because it could not be driven under its own power.

The SEC said the company omitted information on how long it took to refuel its vehicles and how much it might cost to produce the hydrogen needed to power them.


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