EV start-up Nikola settles with US for $125 million

Dec 21, 2021, 7:58 AM | Updated: 12:59 pm

Electric and hydrogen-powered truck startup Nikola has agreed to a $125 million settlement over charges that it defrauded investors after misleading them about its products, technical advances, and financial prospects.

Nikola Corp. violated the antifraud and disclosure control provisions of the federal securities laws, the Securities and Exchange Commission said Tuesday.

In July the founder and one-time chair of Nikola, Trevor Milton, was freed on $100 million bail after pleading not guilty to charges alleging he lied about the company.

The U.S. Attorney’s Office in Manhattan charged Milton, 39, with two counts of securities fraud and wire fraud. He resigned as chairman in September.

The SEC said in its order that Milton embarked on a public relations campaign aimed at inflating and maintaining Nikola’s stock price before the company had produced a vehicle.

The SEC also found that Milton misled investors about Nikola’s technological advancements, in-house production capabilities, hydrogen production, truck reservations and orders, and financial outlook. In addition, it found that Nikola misled investors by misrepresenting or omitting information about the refueling time of its prototype vehicles, as well as the economic risks and benefits associated of a potential partnership with General Motors.

Nikola also went public through something called a special purpose acquisitions company, or SPAC, a vehicle that is getting increased scrutiny from the SEC and other regulators. The SEC issued new accounting guidance for SPACs this year after a flurry of them hit the market.

SPACs, essentially a blank-check company, are used as a shortcut to go public, bypassing the lengthy and costly process of a traditional initial public offering.

SPACs exploded in popularity last year, reaching a fever pitch early in 2021 when they were raising an average of $6 billion every week. They offer investors a way to get into those exciting, potentially high-growth companies or companies or industries, and few sectors are as hot lately as electric vehicle makers.

Companies going the SPAC route often feel more license to highlight projections for big growth they’re expecting in the future, for example. In a traditional IPO, the company is limited to highlighting its past performance, not necessarily the greatest selling point for young startups that have little to show for in sales or profits.

Nikola, based in Phoenix, didn’t admit or deny the SEC’s findings. The company did agree to cease and desist from future violations and to the $125 million penalty. Nikola also agreed to continue cooperating with the SEC’s ongoing investigation. The order also establishes a fund to return penalty proceeds to investors that were impacted.

“We are pleased to bring this chapter to a close as the company has now resolved all government investigations,” Nikola said in a prepared statement.. We will continue to execute on our strategy and vision to deliver on our business plan.”

Shares rose more than 1% on Tuesday.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

People salute the casket of Hershel "Woody" Williams set up in the first floor rotunda of the West ...
Associated Press

WWII Medal of Honor recipient to lie in state at US Capitol

CHARLESTON, W.Va. (AP) — Hershel W. “Woody” Williams, the last remaining Medal of Honor recipient from World War II, will lie in state at the U.S. Capitol, U.S. Sen. Joe Manchin announced at a memorial on Sunday where Williams was remembered for his courage, humility and selflessness. “He never quit giving back,” said Manchin. That […]
15 hours ago
Associated Press

West Africa leaders lift sanctions on 2 junta-led neighbors

ACCRA, Ghana (AP) — West African leaders attending a regional summit agreed Sunday to lift sanctions on two neighbors led by military governments that are now promising a return to democratic rule. The summit of the Economic Community of West African States resolved to lift all economic and financial sanctions imposed on Mali and Burkina […]
15 hours ago
People evacuated from the Field's shopping center gather outside,  in Orestad, Copenhagen, Denmark,...
Associated Press

Several dead in Copenhagen mall shooting; suspect arrested

COPENHAGEN, Denmark (AP) — A gunman opened fired inside a busy shopping mall in the Danish capital on Sunday, killing several people and wounding several others, police said. A 22-year-old Danish man was arrested after the shooting, Copenhagen police inspector Søren Thomassen told reporters, adding there was no indication that anyone else was involved, though […]
15 hours ago
German Foreign Minister Annalena Baerbock, briefs the media after a meeting with her counterpart fr...
Associated Press

Germany, Ireland slam UK move toward overriding Brexit deal

LONDON (AP) — Germany and Ireland have condemned the U.K government’s move towards unilaterally rewriting parts of the post-Brexit deal with the European Union. German Foreign Minister Annalena Baerbock and Irish counterpart Simon Coveney said there was “no legal or political justification” for overriding the agreed trade rules in Northern Ireland. Writing in British newspaper […]
15 hours ago
FILE - California Gov. Gavin Newsom discusses the recent mass shooting in Texas during a news confe...
Associated Press

‘Join us in California’: Newsom targets GOP in Florida ad

SACRAMENTO, Calif. (AP) — Gov. Gavin Newsom is running for reelection in California, but his latest television ad is airing in Florida. The 30-second spot scheduled to air on Fox News starting Monday takes shots at Florida Gov. Ron DeSantis and his policies, while drawing a contrast with California. “Freedom, it’s under attack in your […]
15 hours ago
Associated Press

Video shows Akron police kill Black man in hail of gunfire

AKRON, Ohio (AP) — A Black man was unarmed when Akron police chased him on foot and killed him in a hail of gunfire, but officers believed he had shot at them earlier from a vehicle and feared he was preparing to fire again, authorities said. Akron police released video Sunday of the pursuit and […]
15 hours ago

Sponsored Articles

...
Dr. Richard Carmona

Great news: Children under 5 can now get COVID-19 vaccine

After more than two years of battle with an invisible killer, we can now vaccinate the youngest among us against COVID-19. This is great news.
...
Day & Night Air

Tips to lower your energy bill in the Arizona heat

Does your summer electric bill make you groan? Are you looking for effective ways to reduce your bill?
...
Carla Berg, MHS, Deputy Director, Public Health Services, Arizona Department of Health Services

ADHS mobile program brings COVID-19 vaccines and boosters to Arizonans

The Arizona Department of Health Services and partner agencies are providing even more widespread availability by making COVID-19 vaccines available in neighborhoods through trusted community partners.
EV start-up Nikola settles with US for $125 million