Nikola Corp. has officially reached an agreement on a $125 million proposed settlement with the U.S. Securities and Exchange Commission to resolve claims that its former CEO deceived investors about the company’s ability to construct both electric and hydrogen-fueled vehicles.
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The SEC announced the agreement early Tuesday, with Nikola neither admitting nor denying the claims against them. They must pay a $125 million penalty as well as continue cooperation in the ongoing litigation against former company CEO Trevor Milton. Milton is currently facing criminal charges that he purposely lied about Nikola’s finances, technology and production capabilities.
According to the order, Nikola itself also carried out a range of misrepresentations to investors in the months following its going public.
“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,” Gurbir S. Grewal, head of SEC enforcement, said in a statement. “This misconduct — and the harm it inflicted on retail investors — merits the strong remedies today’s settlement provides.”
Nikola went public in June 2020 by way of a special purpose acquisition company, or SPAC. The SEC has frequently criticized this process as it requires a less stringent vetting process than via the traditional initial public offering, or IPO process.
The SEC’s chair said earlier this month that the regulatory agency was considering tightening rules around how underwriters, boards of directors and sponsors of SPACs structure fees, issue projections and disclose conflicts.
The automaker said in their statment Tuesday that funds were already earmarked during the proposal period, a payment plan ultimately paying five installments over a two year span.
Nikola added simply, it is “pleased to bring this chapter to a close.”
“We will continue to execute on our strategy and vision to deliver on our business plan, including delivering trucks to customers, expanding our manufacturing facilities and our sales and service network, and building out our hydrogen infrastructure ecosystem including hydrogen production, distribution and dispensing stations.”
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Source: https://www.law360.com/articles/1450654/electric-truck-co-nikola-to-pay-125m-to-end-sec-probe
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