Nikola Agrees to Pay $125 MILLION in Fraud Settlement
Washington D.C. — The Securities and Exchange Commission (SEC) today announced that Nikola Corporation has agreed to pay $125 million to settle charges that it defrauded investors.
The SEC alleges the publicly traded truck maker violated antifraud and disclosure control provisions of the federal securities laws by misleading investors about its products, technical advancements, and commercial prospects.
The settlement follows the SEC’s litigated action filed earlier this year against Trevor Milton, the company’s founder and former Chief Executive Officer and Executive Chairman.
According to the SEC’s order, before Nikola had produced a single commercial product, Milton embarked on a public relations campaign aimed at inflating and maintaining Nikola’s stock price.
“Milton’s statements in tweets and media appearances falsely gave investors the impression that Nikola had reached certain product and technological milestones,” the SEC said in a statement. “The order finds that Milton misled investors about Nikola’s technological advancements, in-house production capabilities, hydrogen production, truck reservations and orders, and financial outlook.”
Additionally, the order also found that Nikola “further misled investors by misrepresenting or omitting material facts about the refueling time of its prototype vehicles, the status of its headquarters’ hydrogen station, the anticipated cost and sources of electricity for its planned hydrogen production, and the economic risks and benefits associated with its contemplated partnership with a leading auto manufacturer.”
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While the SEC said Nikola neither admitted or denied the allegations as part of the settlement agreement, the company has agreed it will “cease and desist from future violations of the charged provisions, to certain voluntary undertakings, and to pay a $125 million penalty.”
Nikola also agreed to continue cooperating with the SEC’s ongoing litigation and investigation.
The order also establishes a Fair Fund to return the penalty proceeds to victim investors.