Nikola Will Pay $125M In SEC Settlement Over Trevor Milton's False Statements

Nikola Corporation NKLA has agreed to pay a $125 million settlement that resolves charges brought by the U.S. Securities and Exchange Commission that it defrauded investors through misleading information about the electric vehicle maker’s products, technical advancements and commercial prospects.

What Happened: The SEC litigated action earlier this year against Trevor Milton, the Phoenix-based company’s founder and former chairman and CEO, accusing him of making false statements in media appearances and social media postings about the company’s achievements, most notably its in-house production capabilities and consumer interest in its proposed product line.

The SEC added that Milton and Nikola also misrepresented or withheld information on production requirements and costs associated with its prototype vehicles, including the status of its headquarters’ hydrogen station and the anticipated cost and sources of electricity for its planned hydrogen production.

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What Happens Next: Milton stepped down from his corporate leadership positions in September 2020 and is currently facing both criminal and civil charges for his statements. There are no criminal lawsuits against Nikola.

“As the order finds, 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,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “This misconduct and the harm it inflicted on retail investors merits the strong remedies today’s settlement provides.”

Nikola also agreed to continue cooperating with the SEC ongoing litigation and investigation of Milton, and the settlement order also establishes a fair fund to return the penalty proceeds to victim investors.

At last check, Nikola shares were trading at $9.43; its 52-week range spans from $8.86 to $30.40.

Photo: Trevor Milton, former chairman and CEO of Nikola Corporation. Photo by Miljøstiftelsen ZERO / Flickr Creative Commons