Nikola, the start-up for electric and hydrogen-powered trucks, has agreed to a $ 125 million deal in payments, which investors were deceived after being misled about their products, technical progress and financial prospects.
Nikola Corp. violated the anti-fraud and disclosure control provisions of federal securities laws, the Securities and Exchange Commission said on Tuesday.
In July, Trevor Milton, Nikola’s founder and former chairman of the board, was released on bail of $ 100 million after he did not plead guilty to allegations that he lied about the company.
A U.S. lawyer in Manhattan charged Milton, 39, with two securities fraud and banking fraud. In September, he resigned as chairman.
The SEC said in its order that Milton had launched a public relations campaign aimed at inflating and maintaining Nikolai’s share price before the company produced the vehicle.
The SEC also found that Milton misled investors about Nikola’s technological advances, in-house production capacity, hydrogen production, truck booking and ordering, and financial prospects. In addition, Nikola was found to have misled investors by providing false information or omitting information about the refueling times of its prototype vehicles and the economic risks and benefits of a possible partnership with General Motors.
Nikola also went public through a special purpose vehicle or SPAC, which is under greater control from the SEC and other regulators. The SEC issued new accounting guidelines for SPACs this year after a large number of them entered the market.
SPACs, which are essentially a blank check company, are used as a shortcut to going public, skipping the long and costly process of traditional initial public offering.
The popularity of SPACs grew exponentially last year, reaching a fever in early 2021, when they raised an average of $ 6 billion each week. They offer investors access to these exciting, potentially fast-growing companies or businesses or industries, and few sectors have been as hot as electric vehicle manufacturers lately.
Companies moving to the SPAC line often feel more licensed to highlight, for example, the high growth forecasts they expect in the future. In the case of a traditional IPO, the company confines itself to highlighting its past results, which may not be the biggest selling point for young start-ups that have little to show in terms of sales or profits.
Nikola, based in Phoenix, did not acknowledge or deny the SEC’s findings. The company agreed to end and waive future violations and a $ 125 million fine. Nikola also agreed to continue cooperating with the SEC’s ongoing investigation. The order will also create a fund that will return the fine income to the affected investors.
“We are pleased to close this chapter as the company has now resolved all government investigations,” Nikola said in a statement. We will continue to implement our strategy and vision to implement our business plan.
Michelle Chapman, Associated Press