Electric truck maker Nikola to pay $125 mn US fine for fraud
Dec 22, 2021 - 06:47 AM
NEW YORK — Electric truck maker Nikola said Tuesday it will pay $125 million to end a legal dispute with securities regulators over charges the company made misleading claims and defrauded investors.
The Securities and Exchange Commission (SEC) said the company misled investors “about its products, technical advancements and commercial prospects.”
The settlement follows legal action against company founder and former CEO Trevor Milton, who tried to inflate the company’s stock price, the SEC said.
“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 S. Grewal, head of the SEC’s Enforcement Division.
The actions included “misrepresenting or omitting material facts” about refueling time, the status of its hydrogen station and the cost and sources of electricity, the SEC said.
“This misconduct — and the harm it inflicted on retail investors — merits the strong remedies today’s settlement provides,” Grewal said.
The company, which neither admitted nor denied any wrongdoing, said it will pay the fine in five semi-annual installments over a period of two years, with the first by the end of this year.
“We are pleased to bring this chapter to a close as the company has now resolved all government investigations,” Nikola said in a statement, which said it is seeking reimbursement from Milton.
US authorities in July charged Milton for “brazenly and repeatedly” making false claims about the prospects for the company’s hydrogen- and battery-electric vehicles.
Milton, who is fighting the charges, resigned from the company in September 2020 amid the fraud allegations.
He launched Nikola in 2015 and the automaker went public in June 2020 through a the increasingly-popular path of merging with a special-purpose acquisition company (SPAC).
The company gained traction after signing a partnership with General Motors, but the deal dissolved quickly in late 2020 after the allegations arose.
In its quarterly earnings report in November, Nikola prepared his investors for the fine, setting aside $125 million.