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Electric-truck manufacturer Nikola Corp.
NKLA,
agreed to pay $125 million to settle charges with federal regulators that it defrauded investors by misleading them about its products and technological innovations, the Securities and Exchange Commission said Tuesday.
The action comes follows the indictment of the company’s founder and former CEO Trevor Milton for making false and misleading statements to investors by the U.S. Attorney’s Office for the Southern District of New York and an accompanying fraud charge by the SEC.
According to the SEC order, Milton allegedly misled investors through statements on social media and elsewhere that “falsely gave investors the impression that Nikola had reached certain product and technological milestones.”
The investigation into Milton and Nikola was launched after short seller Hindenburg Research published a research report on the company that alleged that management had misled investors about its internally developed battery and fuel-cell capabilities.
The company had said in a November securities filing that expected to pay $125 million to settle the charges, though the penalty had not yet been approved by SEC commissioners at the time.
“As the order finds, Nikola Corporation is responsible for both 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,” said Gurbir Grewal, head of the SEC’s Division of Enforcement, in a Tuesday statement. “This misconduct — and the harm it inflicted on retail investors — merits the strong remedies today’s settlement provides.”
Nikola agreed to settle the charges without admitting or denying the SEC’s findings that it violated the antifraud and disclosure control provisions of federal securities laws.
In charges announced against Milton in July, the SEC alleged that the former executive explicitly targeted retail investors on social media with his allegedly misleading statements about the company’s technology. The order also establishes a fund to “return the penalty proceeds to victim investors,” the SEC said.
