The electric car company will pay $125 million to settle civil fees from the Securities and Exchange Commission for defrauding investors. The company was accused of misleading investors about in-house production capabilities, technological advances, reservations, orders, hydrogen production, and more.
SEC founder and former CEO Trevor Melton executed a “PR campaign aimed at inflating and maintaining Nikola’s stock price” through tweets and media appearances before the company made a commercial product. It said the company also misled investors by “misrepresenting or omitting material facts” about its headquarters hydrogen plant, how long it would take to refuel model vehicles, the source and energy cost of planned hydrogen production and the risks and benefits. With a major automaker.
“As the matter finds out, Nicola is responsible for Milton’s alleged misleading statements and other alleged deceptions, all of which falsely portray the true state of the company’s business and technology,” said Gurbert S. Grewal, director of law enforcement at the SEC.
Although Nicholas did not admit to or deny the SEC’s accusations of securities law violations, he did agree to some voluntary pledges, pay the fine and stop and refrain from “future suspected violations of provisions.” It will also cooperate with ongoing litigation and investigation.
“We are pleased to conclude this chapter as the company has now resolved all government investigations,” Nicola said in a statement. “We will continue to implement our strategy and vision to deliver our business plan, including delivering trucks to customers, expanding our manufacturing facilities and our sales and service network, and building our hydrogen infrastructure ecosystem including hydrogen production, distribution and distribution plants.” The company also said it is seeking compensation from Milton. “On Costs and Damages Related to Governmental and Regulatory Investigations.”
Nikola went public in June 2020 through a Special Purpose Acquisition (SPAC), which enables companies to bypass the usual process of going public. In September of that year, the Securities and Exchange Commission was investigating Nikola’s allegations about her electric trucks. Melton, who resigned as CEO before the company went public, as CEO just days after news of the investigation surfaced.
A grand jury on fraud charges in July 2021. Accused of lying to investors about “nearly all aspects of the business” to increase Nikola’s share price. He has denied the charges and is free on bail pending a trial scheduled for April.
Meanwhile, Nikola delivered its first electric trucks to customers last week.
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