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Federal prosecutors on Thursday filed securities fraud charges against Trevor Milton, the former CEO of electric vehicle start-up Nikola, in the most prominent case against an executive who owned a business that listed its shares on the stock exchange through a merger.
Indictment of the US law firm in Manhattan Mr. Milton with misleading investors – especially retail investors – about the technology it hopes to produce for battery and hydrogen-powered vehicles.
Prosecutors said Mr Milton had used social media, television and podcasts for nearly a year to spread “false and misleading statements about Nikola’s product and technology”.
Such a misleading statement pertained to the company’s Nikola One long-haul truck prototype, according to the pricing document. Contrary to Mr. Milton’s brilliant explanations on this subject, the prototype did not work.
Federal prosecutors and securities regulators began investigating Nikola when he published a report last fall questioning an investment firm’s products and some of Mr Milton’s claims. That firm, Hindenburg Research, said the company had released a promotional video to suggest it had a working prototype – but never disclosed that the truck was only moving forward because it rolled down a hill in neutral gear. Mr Milton resigned a few weeks later.
Nikola went public in June 2020 through a special purpose buyout called VectorIQ, or a $700 million merger with SPAC. SPACs are blank check companies that raise money from investors in hopes of finding a company with an existing business to buy.
Federal prosecutors said retail investors were hurt by the stock’s sharp decline that began last summer, but not early investors in the company, including Mr. Shares of Nikola were trading at around $14 Thursday morning after dropping more than $65 at a point in mid-last year when the company had a valuation that surpassed Ford Motor.
Nikola said in a statement that he has not been involved with the company since Mr Milton stepped down in September 2020. “Today’s government actions are against Mr Milton individually, not against the company. Nikola has cooperated with the government throughout his investigation.”
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