Nikola expects to settle SEC probe for $125M, founder to pay bill

November 5, 2021

Tyson Fisher

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Facing allegations of lying about its hydrogen-fueled trucks to investors, Nikola is putting the case to rest for $125 million, and it expects its founder, Trevor Milton, to foot the bill.

On Thursday, Nikola revealed in its third-quarter report that it will settle a case filed by the Securities Exchange Commission for $125 million. The agreement still needs to pass a vote by the SEC commissioners.

In the same news release, Nikola stated it will be seeking reimbursement from its founder. The company wants Milton to pay for the “costs and damages in connection” with the SEC investigation.

Fraud allegations against Nikola

Issues for Nikola began in September 2020 after investment research firm Hindenburg Research released a report accusing the company of a major fraud scheme orchestrated by Milton. According to the report, a video showing a Nikola One truck driving uphill was actually a doctored video. In reality, the hydrogen-fueled truck in the video was non-functional and rolling down a hill.

Hindenburg’s report sent Nikola’s stock on a downward spiral. The day that report was released, Nikola stock fell by 10%. Just a few days later, the SEC launched an investigation looking into the allegations. Consequently, investors started to jump ship.

Shortly after, Milton stepped down from his position as CEO. Stock prices dropped by as much as 30% that same day.

In June, Nikola attempted to regain investors’ trust by announcing a $50 million investment in a clean hydrogen project, in Indiana. A month later, it added 51 dealerships in nine states for its Class 8 truck sales.

Two weeks later, the Department of Justice filed a lawsuit against Milton. Nikola stock immediately plummeted by more than 15% to $12.03

Apparently, Thursday’s announcement put investors at ease, but they quickly changed their mind. Nikola stock prices closed more than 25% higher on Thursday. However, investors quickly did an about-face on Friday. As of publication, stock prices were down nearly 17% for the day. LL

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Tyson Fisher joined Land Line Magazine in March 2014. An award-winning journalist and tireless researcher, his news reports, features and blogs bring depth to our editorial content, backed with solid detail. Tyson is a lifelong Kansas Citian.