Hydrogen trucking startup Nikola Corp. agreed to pay $125 million to settle charges that it defrauded investors by misleading them about its products and technical achievements, the US Securities and Exchange Commission announced Tuesday.
The SEC accused Nikola of violating US securities law with numerous misleading statements made in 2020 about the company’s products and its future financial prospects. The company’s founder and former CEO, Trevor Milton, was arrested earlier this year on charges that he falsely portrayed Nikola as close to releasing a functional product.
“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,” said Gurbir Grewal, director of the SEC’s Division of Enforcement, in a statement. “This misconduct — and the harm it inflicted on retail investors — merits the strong remedies today’s settlement provides.”
The amount will be paid in five installments over two years, the first of which is due at the end of 2021. The company went public in 2020 after merging with a special acquisition company, or SPAC.
“We are pleased to bring this chapter to a close as the company has now resolved all government investigations,” the company said in a statement. Earlier this month, Nikola announced that it had delivered its first two vehicles to a customer operating at the ports of Los Angeles and Long Beach.
Unlike his company, Milton doesn’t appear interested in settling. This week, he filed several motions requesting the judge throw out his case, arguing that he wasn’t given fair notice that his statements could be considered criminal or would influence stock sales.
Founded in 2015, Nikola staked out a unique position in the buzzy EV space by claiming it would make zero-emission big rigs using hydrogen fuel cell technology. But the last two years have been especially tumultuous for the company. In November 2020, General Motors put the startup on the map by announcing plans to acquire an 11 percent equity stake. The automaker also said it would help Nikola engineer and manufacture its battery-electric and hydrogen fuel cell vehicles, including the Badger pickup truck.
But less than a week later, short-selling firm Hindenburg Research published a bombshell report accusing Nikola of fraud, including staging a video that showed one of its trucks cruising down a hill. The report set off a chain reaction that resulted in Milton stepping down as board chairman and CEO and eventually his arrest.
So far, Milton’s defense has focused on picking apart the prosecution’s charges that he defrauded investors, arguing that most of his statements were made before the company went public.
According to filings cited by Bloomberg, Milton is accusing the government of focusing on “tweets, social media posts, podcasts, and television or print interviews — many of which were made or conducted long before Nikola was a public company — in an attempt to criminalize promotional speech about Nikola’s products.”