Late last month, alternative fuel vehicle manufacturer Nikola Corporation agreed to pay $125 million to settle fraud allegations brought by the Securities and Exchange Commission. According to the SEC, Nikola misled its investors about its products, technical advancements, and commercial prospects. Cited examples include:
This settlement follows fraud charges brought by the SEC against Nikola founder Trevor Milton last July for “disseminating false and misleading information” through social media about the company’s “technological advancements, products, in-house production capabilities, and commercial achievements.” By overstating Nikola’s progress, Milton inflated the company’s stock price, reaping “tens of millions of dollars in personal benefits,” according to the SEC. Milton was charged with violating the anti-fraud provisions of the 1933 Securities Act and the 1934 Securities Exchange Act. He was freed after posting his $100 million bail and is currently awaiting trial.
Commenting on the recent settlement, Gurbir S. Grewal, Director of the SEC’s Division of Enforcement 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 is best known as a leader in hydrogen fuel cell vehicles, which generate electricity that powers a motor by fusing hydrogen and oxygen. The company also makes conventional plug-in electric vehicles. Back in September of 2020, GM announced a partnership with Nikola to collaborate on the production of an electric truck. However, GM pulled out just two months later. After reaching a peak stock price of $65.90 on July 19, 2021, the company, plagued by scandals and delays, suffered disinvestment, with its stock dropping down to $10.32 as of Jan. 4, 2022. Nikola delivered its first four Tre trucks — two battery electric, two hydrogen fuel cell — just before the holiday.