Nikola to settle SEC case for $ 125 million

Fledgling electric truck maker Nikola has agreed to pay $ 125 million to settle an investigation into allegations the company and its founder defrauded investors by making misleading statements about its products and technology, authorities said on Tuesday. securities regulation.

Nikola settles the case, with the Securities and Exchange Commission, nearly five months after federal prosecutors filed criminal charges against Trevor Milton, founder and former chief executive of the company, who pleaded not guilty. The SEC also filed civil fraud charges against Mr. Milton.

“Nikola Corporation is responsible for both Milton’s allegedly misleading statements and other alleged deceptions, all of which have wrongly portrayed the true state of the company’s business and technology,” said Gurbir Grewal, director of the SEC’s enforcement division, in a statement.

The SEC, in a civil order resolving the investigation, found that Mr Milton had embarked on a campaign on Twitter and in press releases to push up the price of Nikola’s shares with a series of misleading statements. The regulator said Nikola made this worse by making his own misleading statements about the refueling times of his scheduled products.

The company, which has neither admitted nor denied the civil law allegations, said in a statement: “We are delighted to close this chapter as the company has now resolved all government inquiries. “

The SEC said Nikola was continuing to cooperate with his open investigation, a reference to the case against Mr Milton.

Last month, the company said it expected to reach a $ 125 million settlement with the SEC and that it would “seek reimbursement” from Mr. Milton for all costs associated with the investigation.

Nikola is the latest company to merge with a cash-rich special purpose acquisition company to be accused of misrepresenting investors or being investigated for potential wrongdoing.

SPACs are speculative firms that raise money from investors in initial public offerings and then look for operating companies to buy. The market for these investment vehicles has been hot for the past two years – they’ve raised nearly $ 200 billion from hedge funds and other investors.

The SEC has opened a number of investigations into claims made by some of these companies during the merger process. Regulators have argued that hedge fund investors in SPACs and sponsors of these deals fare much better than retail investors who often buy shares in the open market after a deal is announced.

Mr Milton resigned from Nikola in September 2020, several months after the completion of the merger with a SPAC called VectoIQ. The SEC, in the civil lawsuit filed against Mr Milton last summer, said his misleading statements about the company’s prospects helped inflate the stock, raising it “tens of millions of dollars in ‘personal benefits’.

Last week, attorneys for Mr. Milton filed a petition in Manhattan federal court to dismiss several of the criminal charges against him.

Nikola’s stock closed at $ 9.25 on Monday, from a high of over $ 60 in the summer of 2020.