The Securities and Exchange Commission (SEC) announced that Nikola Corporation, a developer of battery-electric and fuel-cell-electric heavy-duty trucks, has agreed to pay $125 million to settle charges that it defrauded investors by misleading them 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 CEO and Executive Chairman.
Nikola will pay the $125 million to the SEC in five installments over two years. The first installment will be paid by the end of 2021, and the remaining installments will be paid semiannually through 2023.
The SEC said that Nikola also agreed to continue cooperating with the Commission’s ongoing litigation and investigation. The order also establishes a Fair Fund to return the penalty proceeds to victim investors.
According to the SEC, 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 order finds that Milton misled investors about Nikola’s technological advancements, in-house production capabilities, hydrogen production, truck reservations and orders, and financial outlook. The order also finds 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 (GM).
Under the terms of the resolution, Nikola neither admits nor denies the SEC’s findings in this matter.
The company said it has taken action to seek reimbursement from its founder, Trevor Milton, for costs and damages in connection with the government and regulatory investigations.